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THE CASE FOR CORPORATE CRIMINAL LIABILITY

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THE CASE FOR CORPORATE CRIMINAL LIABILITY

Matsiko Godwin Muhwezi

HISTORICAL DEVELOPMENT OF CORPORATE LIABILITY

The general belief in the 16th and 17h century was that corporations were incapable of being subject

to criminal law. Eighteen-century legal thinkers approached corporate liability with an obsessive

focus on theories of corporate personality. Corporate liability took very long to grow for various

reasons. For one legal thinkers did not believe that corporations could possess the moral

blameworthiness necessary to commit crimes of intent. Courts could not hold corporations

responsible for crimes that were not provided for in their charters. The most important obstacle was

the court’s literal understanding of criminal procedure.

Crimes in both England and the United States first imposed corporate criminal liability in cases

involving nonfeasance of quasi-public corporations, such as municipalities that resulted in public

nuisance. By the early 1600s, courts began to hold commercial corporations responsible for public

nuisance. The principle underlying the ruling was that no individual agent of the company was

responsible for the corporation’s omissions and that there could be no imputation of guilt from

agent to principal because only the corporation was under a duty to perform the specific act in

question.

As the presence of corporations grew, courts expanded corporate criminal liability from public

nuisances to all offences that did not require intent. It was only in the mid 1800s that corporations

were held liable for misfeasance. This led to the expansion of liability to crimes that involved intent.
As Brickley puts it, “once the principle that corporations could be convicted of misfeasance was

established, there was no theoretical impediment to imposing liability for other acts of

misfeasance.[1] The doctrine of respondeat superior was developed in common law, and this aided the

growth of corporate liability. [2]

In 1909, in New York Central & Hudson River Railroad Co. v. United States, the Supreme Court clearly

held that a corporation could be held liable for crimes of intent. [3] The court based this upon the

principle of respondeat superior.[4] Following this judgement, all courts were willing to hold

corporations criminally liable for almost all wrongs except rape, murder, bigamy and other crimes of

malicious intent.[5]

Critics contended that corporate criminal liability for crimes of intent ran contrary to an aim of the

criminal law – punishment of the morally blameworthy – because it relied upon vicarious guilt rather

than personal fault. Early commentators focussed upon the extension of vicarious criminal liability

to the criminal context, or the extension of corporate criminal liability to crime of intent.

Most of the early instances of corporate liability came from public harms, such as nuisance, for

which private nuisance was unlikely. As a result, public enforcement was necessary to ensure that the

corporation properly internalised the costs of their activities to society. From the 1600s to the 1900s,

the government conducted public enforcement through criminal proceedings. Public enforcement

using civil proceedings arose only after corporate criminal liability reached its present level of

applicability. Maintaining optimal deterrence necessitated imposing liability on the corporation.

Given the absence of widespread public civil enforcement prior to the early 1900s, corporate

criminal liability appears to have been the only available option that met both the needs of public

enforcement and the need of corporate liability. Now, since the concept of criminal liability for
corporations has been in use for centuries, few have questioned why the liability should be criminal

and not civil. It is beyond the scope of this Paper to discuss this; wherever necessary to support my

conclusion, there is a brief mention.

Since India has adopted the concept of corporate criminal liability from England, it is necessary to

understand the position in that country, and Europe.

Germany does not impose criminal liability on corporations. France and Netherlands have

incorporated this liability for corporations. Though corporate liability is becoming popular in

Europe, European standards for imputation of an agent’s actus reus or mens rea to the corporate

principal differs from the American doctrine of respondeat superior. English law only imputes an

agent’s criminal intent to the corporation if the agent is the directing mind and will of the company.

In contrast, in America, respondeat superior does not premise imputation of liability upon the rank

of the corporate agent who possessed intention. Other standards used in Europe lie between the

British alter ego approach and the American law of respondeat superior.

The development has been slow in India; we have been slow to even adopt the practises used in any

foreign country. As late as in 1964, courts were unwilling to hold corporations responsible for

crimes that were done with intent. In State of Maharashtra v. Syndicate Transport Co.,[6] Paranjpe, J.,

held that it would depend on the nature of the offence to hold a corporation responsible for

criminal action resulting from the action of its individual members. Section 2, IPC reads that every

person shall be held liable under the Code for punishment. Under Seciton11, a corporate body is

included in the definition of ‘person.” It was argued that though a corporate body was included in

the definition, there were certain offences that could be committed only by an individual. So where

the IPC provided that certain offences were to be punished only with imprisonment, it would not be

possible to impose this on companies.[7]

The court observed that the definition of a “person” would be read as being subject to the qualifying

clause “unless there isa anything repugnant in the subject or context,” as used in Section 2(42) of the

General Clauses Act. Where a provision provided for fine and imprisonment, it was held to be

inappropriate for the courts to impose only the fine, therefore, the entire provision would be

inapplicable, and the company would not be guilty.[8] This is a very strict interpretation considering

that the IPC was codified in 1860 and more than a century has elapsed, the judges should have

realised that the legislation would not have provided for corporate crimes and their punishment. It

was not until 1975 in the case of Delhi Municipality v. J.B.Bottling Co.[9] that this was changed. Dayal J

observed that where a punishment imposed both fine and imprisonment, the court could impose

only the fine on the corporate body.

In the context of mens rea offences, India seems to have been influenced by England.

In A.K.Khosla v. T.S.Venkatesan, General Electric Company Limited (GE) was accused by Shaw

Wallace Limited (SWL) of resorting to false practises and making false representations in inducing

SWL to enter into an agreement to purchase equity in GE. Charges were framed against GE under

Sec 415, 420, IPC on grounds of cheating.

The court held that cheating is on offence where mens rea is an essential ingredient. The accused

being a corporate body cannot be said the necessary mens rea as such, so it cannot be prosecuted for

an offence under Sec 407, IPC. This unfortunately is the law of the land today.[10] A contrary view

however was taken in Keshub Mahindra v. Union of India,[11] and he was held personally responsible

on charges of manslaughter as Managing Director of Mahinra & Mahindra.

In M.C.Mehta v. Union of India,[12] or the Bhopal gas leak case, the courts introduced the principle of

strict liability. The D.C.M.Shriram Gas leak case[13] went a step further and the Supreme Court
enunciated for the first time the principle of absolute liability. The Factories Act, 1948 was amended

and the directors of a company were defined as “occupier” of a factory and were made responsible

directly for all acts of omission and commission. This definition was challenged by many industries,

but the court ruled in favour of making the top management responsible for all actions. The current

position in India uses the identification doctrine and holds directors to be personally liable. It is

submitted in this Paper that India needs to rethink its liability strategy, and that the identification

doctrine is inappropriate for use.

PURPOSE OF CORPORATE CRIMINAL LIABILITY

It is important to understand the purpose for corporate liability because the choice of liability

strategy is to be determined by this ultimately i.e. whichever strategy achieves the purpose better

must be used.

A number of purposes can and have been offered to justify ideas of corporate fault.

 Global purposes of criminal law i.e. to support and endorse fundamental values of our

society by punishing their breach.

 A second purpose is to deter undesirable activity. So corporate liability should aim to create

incentives for corporations to monitor the activities of its employees. This argument restates

the justification of corporate liability for vicarious, absolute and strict liability offences.[14]

Corporate criminal liability deters corporate managers and employees. Corporations and

other groups are an important source of norms of behaviour for individuals. An individual is

an instrument through which an individual organises his/her affairs, and a larger corporation

is more likely to be a highly developed organisation that passes on its norms to its members.

This refers to criminal organisations, i.e. organisations set up under a façade to basically
 facilitate criminal activities. Deterrence effect is needed to prevent corporations being set up

for illegal purposes, as well as to prevent existing corporations from doing harm in any way.

 Some scholars suggest that there is a retributive purpose in holding corporations criminally

liable because of the possibility that the corporations might profit from engaging in illegal

activities. It is proper that the fines should be borne by those who received the fruits of the

illegal enterprise so as to prevent unjust enrichment.

There are certain things not wrong in themselves, but are deemed criminal for the sake of the public

good. This sufficiently accounts for corporate liability for absolute and strict liability offences. But

the case is different for mens rea offences. There are people who argue that the need for corporate

criminal liability arises only when regulatory methods have been exhausted. But this view is

inconsistent with the purpose of criminal liability, i.e. deterrence. As Glanville Williams writes, “the

result of a rule disregarding fault may be that businessmen come to regard fines as part of their

overhead costs. This attitude of indifference thus engendered toward the criminal process through

the inflation of law may well spread to other offences, where an element of fault is present……the

ultimate result may be a decrease in the preventive effect of the law.”[15] The conflict brings into

focus the need to co-ordinate the liability strategy used with the aims corporate criminal liability

seeks to achieve.

COMPARISION OF LIABILITY STRATEGIES

DERIVATIVE MODEL OF CORPORATE CRIMINAL LIABILITY

Corporation as a fictional identity

Nominalist theory views corporations as collectivities of individuals. So culpability of companies is

the same as the culpability of the individuals associated with it. The notion that the corporation
itself, independent of its members can be liable is meaningless in this view of corporate personality.

This implies that corporate responsibility is derivative.

This view, as succinctly put by Smith and Hogan believes that a corporation “is a legal entity but has

no physical existence and cannot act or form an intention of any kind except through its directors

and servants. As each director is also a legal person quite distinct from the corporation, it follows

that a corporation’s legal liabilities are all, in a sense, vicarious.”[16] This would basically mean that

corporations do not commit crimes, people do. Two models have emerged from this view.

MODEL I VICARIOUS LIABILITY

Vicarious liability concept has been borrowed from tort law,[17] wherein there is automatic liability

for the offences committed by the officers within the scope of their employment. This is a civil law

concept that finds application in criminal law today. Vicarious liability describes the situation where

one person is held liable for the misconduct of another.

It plays an important role in three ways:

 Some statutory offences expressly or impliedly impose vicarious liability on all employers

and principals for the acts of employees and agents.[18] This implication is drawn mainly for

offences of strict or absolute liability, although the same interpretation has also been given to

mens rea offences that I will show is incorrect.

 In some countries, statutes expressly subject companies to vicarious liability for the conduct

of its officers and directors. This is the case in Australia, though the defense of reasonable

care is permitted.
  Some jurisdictions have embraced vicarious liability as a general principle for corporate

liability even for mens rea offences.

The conduct that makes a corporation vicariously liable must be within the scope of the individual’s

authority. As to why this concept seems to find favour in corporate law finds its answer in tort law.

It is used in tort law for three reasons that apply to corporate liability too.

 The employer is likely to be better able to compensate the tort victim than will the employee;

the cost of such torts can be dealt with or insured against as a cost of doing business[19]

 The employer is in a better position than the employee to mandate that responsible

precaution is taken.

 The employer engages the employee for economic gain, so it is fair that for the law to

demand that the employer bear the losses occasioned because of the employment

relationship, for it is the employer who is going to reap the benefits of the relationship.[20]

The relevant question here is whether it is legitimate to use tort law and civil law concepts in

criminal law. Granville Williams contents that the reason in using vicarious liability in tort law is

largely compensatory. But in criminal law, the main purpose is deterrence, so the reasoning in using

vicarious liability is faulty. I feel that vicarious criminal liability is inimical to the idea of personal

fault. It becomes even more problematic in mens rea cases. So even if one were to concede that

vicarious liability is useful in many circumstances, it is definitely inappropriate for mens rea cases.

Of particular importance is the Canadian case of R. v. Stevanovich.[21] An owner and co-owner of a

hotel were sought to be convicted for violating regulations pursuant to the Liquor License Act. The

evidence was that the owner and the co-owner were not present at the hotel at the time of the
violations. Dublin’s J.Aheld that “in particular cases where the license holder has been held liable for

the act or omissions of others, it is by reason of the interpretation given to the statute which created

the offence and not merely by reason of the relationship of master and servant.”[22]

So in other words, what he said was that vicarious liability has no place in criminal law as a general

rule. With few exceptions, statutory intervention is required in order to attach criminal liability to

one person for the act or omissions of others. So the owner in this case was held liable because as a

license holder, a statuary duty was imposed upon him. The delegation doctrine was not used in this

case. The judge considered that the regulations at issue create an offence for “every person” unlike a

number of other regulations that expressly refer to “every holder of a license.” Thus, no duty is

specifically imposed on the license holder to ensure that these particular regulations are met and

since no duty is imposed, no vicarious liability is created. So then it would appear that statutory

instances must be created very explicitly. The relevance to corporate law is that corporations are

equally subject to vicarious liability as natural persons, to the extent that they can be owners, license

holders, etc.

Critique of vicarious liability

In some ways, vicarious liability provides a good system.[23] If the discharge of a responsibility is

delegated to an employee or an agent, the employer remains vicariously liable for any managerial or

organisational negligence on the part of the delegate. A salient feature of this approach is to find

organisational negligence at all levels in the corporate hierarchy, in the organisation of the specific

task relates to the injury.[24]

Vicarious liability has been criticised for being both underinclusive and overinclusive. It is

underinclusive because it is activated only through the criminal liability of some individual. Where

offences require some kind of fault, the fault must be present at the individual level. So if a fault

cannot be attributed to an individual level, there is then no corporate liability regardless of corporate

fault.[25]

Vicarious liability is overinclusive because if there is individual fault, corporate liability exists even in

the absence of corporate fault. The general objection to corporate liability in criminal law is that it

divorces the determination of liability from an inquiry into culpability. Well, this is true no doubt,

but then it is equally applicable to individuals too. So this is a criticism not against the application of

vicarious liability to corporations, but of vicarious liability itself.[26]

MODEL II IDENTIFICATION DOCTRINE

The doctrine of identification equates the corporation with certain key personnel who act on its

behalf. This concept takes the conduct and state of mind of certain high-ranking officials (“Relevant

Factors”) to be the conduct and state of mind of the company itself so that it may commit directly

crimes which are not attributable to a company merely on the basis of corporate liability.[27] This

doctrine allows corporate liability for crimes falling outside the cope of vicarious liability, which was

restricted to negligence in tort and to regulatory criminal offences. In some versions of the doctrine,

these personnel are said to represent the “directing mind” of the company. Lord Denning

in H.L.Bolton (Engineering) Co. v. T.J.Graham & Sons Ltd., explains this doctrine clearly. He likens a

company to a human body with a brain, a nerve centre, and hands to hold the tools and to act in

accordance with directions from the centre. Some of the people in the company are mere servants

and agents who are nothing more than hands to do the work, and cannot be said to represent the
mind or will. Others are directors or managers who represent the directing mind and will of the

company and control what it does.”[28]

This is also known as the organic theory as the company is viewed as a body with various organs,

with the directors being the brain. A leading statement is that of Lord Reid in the same case,

“Normally, the Board of Directors, the managing director and perhaps other superior officers of the

company speak and act as the company. Their subordinates do not. They carry out orders from

above and it can make no difference that they are given some measure of discretion.”[29]

The identification doctrine narrows the scope of vicarious liability by restricting the range of persons

who can make the corporation liable. This eliminates the overinclusiove effects of vicarious liability.

In Tesco Supermarket, the form of this liability was particularly restrictive, it held that the managing

director, the chief executive officer the board of directors and other officers at a similar level are

liable.[30]

Relation between vicarious liability and identification doctrine

There has been some controversy as to the relationship between the nature of identification liability

and vicarious liability. The simplest model is that identification is a modified form of vicarious

liability under which the liability of a restricted range of personnel is imputed to a corporation.

Instead of all employees and agents having the capacity to make the corporation liable, it is now

confined to only one category of persons with directorial and managerial responsibilities.

Merger theory
There are however arguments that refute such a simplistic and prima facie relationship. The

argument is that identification liability does not involve the imputation of liability from one person

to another because the two persons have merged. “The company cannot be vicariously liable since the

person is the embodiment of the company, and his mind is the mind of the company.”[31] The

recognition that identification is not conceptually different from vicarious liability but is merely a

restricted version of it allows clearer scrutiny for the purpose and effects of the restriction.[32]

Critique of the merger theory

The merger theory of identification has several loopholes. It gives rise to fundamental questions

such as whether the individual who makes the company liable can be personally liable.

 It is an unrealistic portrayal of how companies function. This may be true only for very small

companies, or sole proprietorship and partnership firms.

 It becomes even more problematic when the proposals to modify the identification doctrine

by expanding the range of personnel who can be identified with the company.[33]

So I would therefore agree that this doctrine is a form of vicarious liability.

PRIMARY LIABLITY

While identification doctrine is usually discussed in the context of corporate liability for mens rea

offences, it is important not to ignore the manner in which some kind of identification is occurring

with regard to absolute and strict liability offences.

VERSION I Absolute liability

Where the accused is a corporation, offences of absolute liability closely resemble vicarious liability

or respondeat superior. As there is no defence of due diligence, nor a requirement of mens rea, liability
merely follows from the commission of the actus reus of the corporation such that the corporation

is liable for the acts of any employee who is acting on the corporation’s behalf.[34] In the Canadian

case of Dredge & Dock, Estey, J describes corporate liability for an absolute offence as “a case of

automatic primary liability.” Accordingly, there is no need to establish the rule for neither corporate

liability nor a rationale therefore. The corporation is treated as a natural person.[35]

VERSION II Strict liability

Regarding corporate liability for strict liability offences, Estey J. writes, “as in the case of absolute

liability, it matters not whether the accused is corporate or incorporate, because the liability is

primary and arises in the accused according to the terms of the statute in the same way as in the case

of absolute liability offences. It is not dependent upon the attribution to the accused of the

misconduct of others. This is so when the statute properly construed, shows that a breach of the

statute leads to guilt, subject to the limited defence of due diligence. In both cases, liability is not

vicarious but primary.”[36]

Smith and Hogan are unfavourably disposed towards strict liability in statute law. In their view, strict

liability can result in conviction of persons who have behaved impeccably and who would not be

required to alter their conduct. Even in cases where an absolute discharge is given, the defendant

may feel aggrieved at having been stigmatised through no fault of his.[37] Jerome Hall held strict

liability to be an unwarranted extension of legal liability, and prefers a separate code of “civil

offences” requiring negligence, and tried by civil courts.[38] I feel that strict liability offences should

be abolished because in a strict sense, these offences are really one of negligence. The other side of

the coin says that there have been a series of disasters resulting in considerable loss of life.[39] These

have caused a reawakening of public interest in the possible use of gross negligence and reckless
manslaughter in such cases. But theoretical legal reasoning stresses that strict liability, or convicting a

person for a regulatory offence on prima facie evidence but without proof of mens rea, is unjust and

holds persons liable for offences for which they are morally blameless.[40]

Critique of identification doctrine

The identification doctrine has many problems:

Distortion of liability

It distorts the allocation of liability as between large and small corporations. In large

corporations, discretionary powers do exist at the lower level, and very important decisions are taken

at the subordinate level. So a corporation will be insulated from liability for these decisions unless

the doctrine is given very wide scope.

The Board of Directors may delegate some part of the functions of management giving to their

delegate full discretion to act independently of instructions from them. So while there is a directing

mind, it is not always possible to point only at one person always. In a large country like India with

operations spread out, the office at the headquarters is not in a position to know all that occurs at

the subordinate level. Especially in a production-oriented company, there is a wide gap between the

office that handles the finance aspect and the factory engaged in production. So the discretion given

to subordinate officers should be taken into account while ascertaining the accountability of the

company.

Australia and New Zealand have adopted this wider approach in their decision, while Canada has

qualified its application. If at all India must adopt this approach, it must keep in mind this critique.
Knowledge and problem of proof

The identification doctrine rests on a category error. The doctrine is least problematic when the

highest officer in the company has direct knowledge of the elements of the particular offence.

Although the doctrine has been applied to facts beyond this particular doctrine, it entails great

uncertainties in such situations when invoked. The doctrine makes for different outcomes

depending upon the kind of organisation the company is. These differences do not make for a

rational scheme of liability. Take for example a case where there is a pattern of dishonest conduct at

the heart of a major company. Here the doctrine will allow a finding of guilt against the companies

such individuals dominate, although there will be occasions where from the perspective of the

“innocent “ constituencies within the companies, the malefactor company may be as much a victim

as anyone else. Consider a company that consistently profits by wrongdoing against third parties, as

in the case of insurance companies selling pension schemes unsuited to client needs. There will be

little chance of a corporate conviction under these circumstances. This is because all that has been

revealed in terms of corporate policy is a hard-sell bonus based sales scheme. The chance of a

corporate conviction in this case is little.[41]

The “directing mind” principle is not adequate and there are areas where it actually cannot convict a

corporation. The case of R. v. H.M.Coroner for East Kent[42] bears testimony to this. This is the case

of the Zeebrugge ferry disaster in which the Herald of Free Enterprise, an English Channel ferry, put to

sea with its bow doors left open capsized and nearly 200 people drowned. The negligence was at the

subordinate level where the assistant boatswain forgot to check whether the bow doors had been

closed. The Board of Directors did not accept their responsibility for the disaster, as it was not them

who had applied their minds to it at all. So the court held that evidence was not sufficient to support

a case of manslaughter against the company or anyone else. The point that emerges here is that the
acquittal was made more likely because of the doctrine that corporate liability is derivative from

individual liability. The likelihood of acquittal was further increased by the narrow scope of the

identification doctrine in English law.

Identity crisis

Another issue is whether to secure conviction of a corporation, there must be an identifiably guilty

person with whom the corporation may be identified. In R. v. Dawson City Hotels LTd.[43] a hotel

company and a hotel manager were charged with defrauding the power commission. It was held that

it was necessary to have a finding of guilt on the part of the manager before there was any possibility

of finding guilt on the part of the corporation. This decision is conceptually consistent with the

identification doctrine, but it raises important issues.

1. Does this call for a different standard of proof, or a reverse onus, for corporate defendants

to overcome evidence problems created by corporate secrecy?

2. This case raises the concern that a readily available finding of corporate liability could serve

to shield human defendants for justified criminal liability

3. The requirement that there must always be an identifiable human for any corporate crime

restricts the reach of criminal law from finding culpability in the group itself, which in my

opinion is desirable.

More than this, a powerful criticism is that there is a distinctive form of culpability which is

specifically corporate and which need not be tied to the culpability of any person associated with the

company.

Uncertainty and standards of proof

It is in the matter of standards of corporate safety that the doctrine may be seen at its most

dysfunctional. If the culpability for corporate manslaughter has to be proved in terms of

circumstances of the death of many people – as in the Bhopal gas disaster – a senior corporate

official is unlikely to have been sufficiently involved in the incident that has led to the death for any

culpability to be proved against him.[44]

If findings of identification are confined to those corporate officials with plenary authority, at least a

measure of doctrinal certainty is required. That certainty is lost when courts take a wider view in the

interests of policy. So there arise cases where a non-executive director with no involvement in the

company’s management is nonetheless identified with the company. Uncertainty increases when

courts depart altogether from the doctrine of identification.

A telling case is that of Meridian Global Finance v. Management Asia Ltd.[45] Here the contended issue

was whether the company “knew” that it had acquired a shareholding in another company for the

purposes of statutory disclosure requirement. A fund manager was aware of the relevant facts but he

was found to lack sufficient status to be identified with the company. Nonetheless, his knowledge

was found to be corporate knowledge. Consequently the ruling was that the knowledge on part

of any corporate officer or employee would suffice. [46]

The striking feature of this decision is that it denies that there is any general theory in the matter of

attributing criminal liability to companies. There is no overarching theory of attribution. The

threshold question is then whether the offence in question is one that may be perpetrated by

companies. If it is, one then moves one to a consideration of the level in the corporate hierarchy
where culpability should be located in order to give best expression to the terms and policy of the

offence.

Time consuming

Moreover, whenever this doctrine is used, it takes many days of cross-examination with the question

whether particular individuals were sufficiently elevated in terms of status and role to be identified

with the company.

Economically not viable

There is another economic reason as to why individual liability is not a good idea. Assuming that

individual liability is adopted, then managers who bear legal risks will likely demand compensation in

the form of a risk premium. This risk premium is higher than that the corporation would have to

offer shareholders to bear the risk because shareholders can easily diversify the risk. Thus,

reallocating the risk of loss through corporate liability rather than individual liability may result in

social gain without undermining the goal of deterrence.[47]

Mens rea offences

The concept of corporate mens rea was used for the first time in Canada in R. v. Fane Robinson

Ltd.[48] In this case, a corporation was charged with conspiracy to defraud and with obtaining

money by false pretences. In arriving at a guilty verdict, Ford, J.A., adopted the reasoning of the

House of Lords in Leonard’s Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd,[49] a case involving fault

principles. Viscount Halsdane held that “the corporation has no mind of its own; its active and

directing will must consequently be sought in the person of somebody … who is really the very ego

and centre of the personality of the corporation.” This principle has been reiterated in numerous

cases.
I feel that the test will be impressionistic in its application and is likely to be limited to the particular

circumstances of each case, including the sort of corporation involved and the sort of offence

committed. Samuel R. Miller argues that corporate criminal liability through respondent superior is

inconsistent with the doctrine of mens rea when imposed for intent crimes committed by lower level

employees against the express instructions of management.[50]

Conclusion

The identification doctrine needs to accept some realities. Though the doctrine argues that the

activity must be “within the scope of the authority of the directing mind,” this does not indicate that

all criminal activity is beyond the authority of any employee. The usage of “scope of employment” is

misplaced here since this is integral to the vicarious liability doctrines in tort, agency and master and

servant laws. So the identification doctrine must read that the act in question must be done by the

directing force of the company when carrying out her assigned functions in the corporation. This

doctrine does not stimulate shareholders to exercise stricter supervision and control in the selection

of its directors because anyway, it is the directors who are personally responsible. There nowhere

exists a convincing defence of identification either as a theory or in terms of its practical effects.

The assignment of liability is arbitrary since there is no necessary relationship with culpability. This

critique holds true against vicarious liability too.

The nature and consequences of the doctrine of identification have been justifiably criticised. In the

face of this kind of deficiency, clearly an alternative is wanting. Another model was created within

the nominalist framework to solve such problems where it was difficult to attribute fault to either

the “directing mind” or to any particular subordinate officer. This doctrine is the aggregation model.
MODEL III AGGREGATION

The theory of aggregation is an attempt to capture and express a truly corporate guilt. It is argued

that for the purposes of calculating corporate criminal liability, the conduct, states of mind and

culpability of individual representatives of the corporation should be

“aggregated.” Aggregation involves matching the conduct of one individual with the state of mind

or culpability of another model.[51] Alternately, where an offence requires a particular level of

knowledge or negligence, this could be found in an aggregation of the knowledge or negligence of

several individuals.[52] In the United States, this model has been accepted though as a qualification

to the idea of deriving corporate from individual liability.[53] The federal courts in the United States

have endorsed this concept of “collective knowledge.” As stated in United States v. Bank of New

England, “a collective knowledge instruction is entirely appropriate in the context of corporate

criminal liability. Corporations compartmentalise knowledge, subdividing the elements of specific

duties and operations into smaller components. The aggregate of those components constitutes the

corporation’s knowledge of a particular operation.”[54] English law has rejected this doctrine, while

Australia has adopted it.

The idea of aggregation has found the greatest favour where negligence is at stake and a decision has

to be made about whether a collective failure to exercise reasonable care was culpable or about how

great the measure of culpability was. Smith and Hogan argue that this concept is useful in cases of

negligence; the company owes a duty of care and if its operations fall below the standard required, it

is guilty of gross negligence. A series of minor failures by officers of the company might add up to a

gross breach by the company of its duty of care. But they dismiss its application in cases involving

subjective fault. This is because it is not possible to create an artificial mens rea; this doctrine is

inapplicable in offences requiring mens rea, intention, knowledge or recklessness.[55]

Mens rea

Can mens rea of the corporation be established by aggregating the fault of those who embody the

corporation? To some commentators, the idea of applying aggregation to subjective fault is possible.

They claim that knowledge is a state of mind that can easily be conceived in collective terms. For

example, an organisation may “know” complex matters when individuals have access to only some

part of the total. Similarly, aggregation can make an organisation collectively reckless if the foresight

of individuals in different parts of the organisation is seen together.[56]

Critique

The problem with aggregation is that it is actually difficult to connect the state of mind of one

person with the conduct of another. There must be some real connection between the two to justify

doing so. This model has many problems that are actually very fundamental; it distorts the nature of

corporate liability. One may note that it is being used within the derivative framework. This makes

the liability seem very artificial, and even more basic is whether this model is useful or not.[57] The

starting place for the theory is the fault of associate individuals. Yet, there is nothing in the theory

itself which informs whether the faults of all or only a restricted class of those individuals associated

with the company may be attributed; this would be a matter of stipulation other than the theory

itself.[58]

If one or more individuals is possessed in full of the relevant culpability, then the theory will not

extend beyond vicarious liability. The theory comes to its own where it cannot be said of any

associated individuals that they have the culpability that the offence requires.
Whether companies may be considered as “real” moral agents is a relevant issue. What are the

practical implications of adopting the theory? Let us take the Bhopal gas case[59] as an example.

Union Carbide was charged with manslaughter. Assume that the prosecution is allowed to invoke

aggregation to prove grossly negligent conduct on the part of the company. So the prosecution calls

various persons associated with the company to elicit what they did or failed to do. Suppose that no

individual has been shown to be guilty, and yet the court has found the company guilty in terms of

the aggregation theory. These persons will now fall under the shadow of a serious offence without

the necessary culpability being established against them.

The very nature of the theory would encourage the prosecution to trawl for as much fault it could

find from within the company. The prosecution will have to prove X in a case where no X exists, so

what it will do is to find numerous less-than-Xs to persuade the court to find X.[60]

I feel that aggregation can only be viewed as a small and vague part of a broader conceptual

framework for tackling issues of corporate liability. This is step closer to the organisational scheme

rather than the derivative model. The traditional insistence that corporate liability be derived from

individual liability is both unnecessary and unwise. At a minimum, the law of corporate criminal

liability should permit the attribution of criminal responsibility on the basis of the aggregation of the

negligence or knowledge of individuals. The problem in Indian law in this area seems to be

generated by a failure to develop criteria for the judging of collective processes. The identification

doctrine severs the necessary connections between individuals within such processes, and the

rejection of aggregation leads to an inappropriately individualistic approach.Better still, criminal law

should be made to focus directly on the issue of organisational culpability.

ORGANISATIONAL MODEL OF CORPORATE CRIMINAL LIABILITY

It will be argued in this chapter that the organisational model of liability is far superior to the type of liability discussed

above.

Contrasting conceptions of corporate personality lead to dramatically different conceptions of the

criminal responsibility of corporations. In brief, organisations function as real entities in ways that

are not reducible to propositions about individuals. So the corporation then is something more than

what is attained from the sum of all the individual parts. The Nominal School is criticised by the

Realist School that believes that corporations have an existence independent of the existence of its

members. This implies that corporate responsibility is primary, i.e. it falls entirely on the corporation

as if it were a real entity. This doctrine believes that there is no reason why attributing blame to

companies is a fiction or why the corporation itself should be immune from blame.

It will be argued here that concepts traditionally used in addressing issues of culpability have

collective meaning in ordinary language and can be given collective interpretations when they occur

in statutory contexts. This is true not only of negligence, but also of the terms that are used to

designate forms of subjective fault, such as intention, knowledge and recklessness.

Corporate negligence

Under this model of corporate liability, criminal responsibility is attributed for a negligent omission

to prevent harm or to guard against the risk of its occurrence, rather than for positive action.[61]

The accepted rule is that corporations have a duty of care against their operation as from causing

harm and their structures and resources being used to cause harm. So corporations are now treated

as potential objects of blame. So aggregation of individual negligence becomes reasonable under

such circumstances. When a number of individuals within a corporation have been negligent to

some degree, the corporation may justifiably be said to have been grossly negligent.

Courts in Canada[62] have opined that the identification doctrine is applicable only when the action

taken by the directing mind

 Was within the field of operation assigned to him

 Was not totally in fraud of the corporation

 Was by design or result partly for the benefit of the company.

An alternate view is that it is sufficient if the conduct is performed by a person who can make the

corporation liable and the conduct occurs within the scope of the individual’s office or employment.

I feel that the basic question here is whether the corporation had a duty to guard against the

occurrence of the conduct and whether it was in breach of that duty.[63] It clearly does and will be

responsible whether the negligence was in pursuance of individual or organisational ends. If

corporate negligence results in deaths, and if the degree of negligence is sufficiently great, should the

company be held liable for murder is the relevant question. John Braithwaite argues that if an

individual did something wrong in clear violation of rules, then the corporation cannot be held liable

for him.[64]

I however feel that it is the duty of the company to see that no member commits such acts. It would

be a failure on the part of the company to take reasonable care to prevent the commission of a crime

by its member.

Critique
The model would definitely involve some compromise on the deterrent power of criminal law. But

the advantages outweigh any such drawbacks.One advantage of this is that since corporations

command large resources, the standard of care expected of such corporations can be adjusted in

light of the resources available to the corporation. So a higher standard may be expected.

Secondly, the shareholder who is concerned about the dangers of corporate negligence can take

protective action by seeking to have safety systems implemented and by selling her shares if

appropriate measures are not implemented.

Only in Australia and Canada are schemes of corporate negligence present. In the former, the

scheme of corporate negligence is independent of individual liability. In Canada, there is a provision

relating to the failure of a corporate representative with directorial or managerial authority to

exercise reasonable care.[65] The same on the part of the corporation itself is conspicuously missing.

Neither scheme contains any special provision relating to corporate liability for omissions. So then

ordinary principles of liability to omissions would apply. It is submitted that this area presents a

vacuum that leaves much to be addressed. As of now, a corporation would be liable for positive

acts, but liable for omissions only when there is some express statutory provision. It is further

submitted that corporations should be subjected to a general duty to guard against the use of their

structures or resources to cause harm. All these suggestions fit in very well with the organisational

doctrine.

Corporations and subjective mental states/mens rea

Mens rea cases is the toughest area to reckon with since it is difficult to argue that the corporation

incurs primary responsibility as a person as a corporation simply has no mind.[66] People argue that
is perfectly justified, as it is no more artificial than attributing states of mind to corporations than it

is to human beings. I would advocate corporate liability for mens rea offences where the

prosecution can point to a guilty corporate as an element of that offence. There is no general rule of

interpretation requiring that subjective mental states be applied only to individuals.[67]

When we use the word “we” and “our” in our context, we are not referring to a collectivity of

individuals each of whom contributes something, but to a wider collectivity of which they are a part.

Several writers have made the suggestion that organisational policy is a form of collective intention.

The intent is to use the corporation’s resources in a certain way.[68]

It is the rationale that explains the policy adopted by the corporation. Similarly, a reference to the

polices pursued by a company may be a reference to the rationale that makes sense of its actions

rather than to any goals that have been identified and articulated by the participants. So intent can be

attributed to a set of policies, rules and practises, informal and formal.[69]

The intent is that rationale that best explains the corporation’s policies as a whole. It is the common

theme that makes overall sense of what would otherwise be a jumble of separate items. Policy guides

the conduct of corporate members. Their ideas about the policies they must pursue can be formed

from their interpretations of what are said and done within the organisation, as well as from express

directives.[70]

So clearly, we have an option whether or not to admit collective meanings for the words that signify

subjective fault in criminal law. In the law of individual criminal responsibility, the meanings of

terms describing subjective mental states have been construed by selecting strands within ordinary
language and by developing them to suit the purposes of criminal law. The same process needs to

occur for the law of corporate criminal responsibility.[71]

This model of liability suggests that for offences involving intention, knowledge, or recklessness, a

corporation should be held criminally responsible if “it authorised or permitted the commission of

the offence.”[72]

One of the ways in which this test may be satisfied is through identification of the corporation with

key personnel.[73] Another way is by way of the corporate culture. The fault element can be located

on the culture of the corporation even though it is not present in any individual. Corporate culture is

defined in broad terms as an attitude, policy, rule, and course of conduct or practise existing within

the body corporate generally or within the area of the body corporate in which the relevant activities

take place.[74]

Critique

For one, the concept may appear too vague. In a prosecution, there would have to be proof that

specific identified features of the culture favoured non-compliance. The solution appears to me to

be in a modified role for the identification doctrine. This is what Fisse labels as reactive corporate

fault, whereby failing to react satisfactorily after unjustified risk-taking and harm-doing is itself

sufficient to establish corporate mens rea. Fisse envisages a system whereby a corporation, upon

proof of the actus reus is required by court order to develop within a certain time period internal

systems designed to prevent further offences.

But one such way to ascertain this would be to find out whether
  Authority to commit a similar offence had been previously given by a high managerial agent

of the body corporate.

 Whether the person actually committing the offence reasonably believed that a high

managerial agent would have permitted the commission of the offence at issue.[75]

Evidentiary and substantive reasons

Even if this seems too vague, there is an alternate approach within this model. The

potential sources of criminal responsibilities can be restricted to those policies, rules and

practises that are the products of the formal decision-making processes of the

corporation. Despite this, there are evidentiary and substantive reasons for taking into

account the informal culture of the company. The evidentiary consideration is that a

formal system of standing orders may be designed to mask an institutionalised

pattern of criminal conduct. The substantive consideration is that the life of a corporation

inheres as much in its informal practises as in its official decisions. So as long as there is

adequate nexus with the corporation, there is no good reason for excluding informal

practises from consideration.[76]

Recklessness

When a corporation has developed a culture of non-compliance, it can be described as having been

“reckless” with respect to the commission of an offence. The culture may have caused the offence

to occur, either because the conduct was specifically directed or because the nature of the culture

had led to its commission. Alternately, the culture may have given psychological support for the

commission of the offence, through either active encouragement or through passive tolerance.[77]

The common bond between these various modes of participation is that a positive feature of the
culture can be said to have favoured the commission of the offence. A corporation would be held

responsible for an offence involving subjective fault because of this positive feature. The

corporation would not be liable for failure to match an objective standard, as it would in relation to

an offence of negligence. One may also note that had this been the standard used to impute

corporate responsibility, in the Zeebrugge ferry case, there would have been convictions.[78]

As a corollary, liability can be based not only on the existence of a culture of non-compliance, but

also on the failure of the body corporate to develop a culture of compliance. Failure to develop a

culture of compliance is negligence.[79] This area is resolved but the question arises as to whether it

is an appropriate ground on which to hold a corporation responsible for the intentional, knowing or

reckless commission of an offence. I feel that this model has to be restricted to areas where there is

non-compliance. If distinctions between types of subjective fault are worth making for individual

responsibility, it is worth making the same for corporate responsibility too:

Corporate culture

In order to establish that a corporation committed an offence intentionally or

purposefully, it should be proved that it was corporate culture to commit the offence. This

corporate policy also includes a constructive form, in which a policy is attributed to a company

when it provides the most reasonable explanation for the corporation’s conduct so it can be inferred

by the members to be an implied directive. This kind of culpability is worse than that of a

corporation where the culture merely favours non-compliance with the law because corporate

members may feel that they are under an implied directive to commit the offence. It would not be

easy to prove constructive intent beyond reasonable doubt, but that is no reason for allowing

corporate recklessness to be substituted where intent is specified in the elements of an offence.

Culture favouring commission

In order to establish that a corporation has committed an offence” knowingly” or

intentionally, it should necessary to prove that not just that corporate culture favoured the

commission of the offence, but that the culture favoured it knowing commission. The knowledge

that the offence was being committee should also be held within the organisation. It is not sufficient

that knowledge alone be there in the mind of the person who makes a decision for the company. If

the corporate culture is hostile to the knowing commission of the offence there is no reason to hold

that the corporation itself acted knowingly. What justifies invoking the idea of collective knowledge

is that not only is the knowledge possessed but also the corporate culture positively favoured the

commission of the offence with that knowledge.

Culture favouring openness

The idea of collective knowledge can be invoked even when there is relevant

information divided between corporate personnel. In United States v. Bank of New England,[80] let us

assume that only one employee new that the relevant transactions had occurred but not that there

was an obligation to report. Another employee knew there was an obligation to report and was last

aware of such transactions were taking place, but decided to do nothing to make other employees

aware of this requirement. It is here that collective knowledge helps. The failure to pass on relevant

information could be attributed to a virulent hostility in the corporate culture to governmental

scrutiny of financial transaction, so that the culture favoured the knowing evasion of obligations in

this area.

The following suggestions could be expressed in propositional or statutory form in this way:
  If recklessness is a required fault element of an offence that fault element may be established

by proof that the culture of a corporation caused or encouraged non-compliance with the

relevant provision.

 If purpose is a required fault element of an offence, that fault element may be established by

proof that it as the policy of a corporation not to comply with the relevant provision.

 A policy may be attributed to a company where it provides the most reasonable explanation

of the conduct of that corporation.

 If knowledge is a required fault element of an offence, that fault element may be established

by proof that the relevant knowledge was possessed by a corporation

 Knowledge may be attributed to a company where it was possessed within

the corporation and the culture of the corporation caused or encouraged non-compliance

with the relevant provision.[81]

All that should be required to make the corporation criminally responsible is that the material

elements of the offence occurred, that positive features of the corporate culture caused or

encouraged their occurrence, and that the measure of corporate culpability fits the level of

culpability prescribed for the offence.[82]

CONLCUSION

In order to recast the law of corporate criminal liability within a realist framework, two fundamental

innovations need to occur:

1. Duty to exercise care

Recognition needs to be given to a duty upon the corporation to guard against the risk that their

operations may cause harm or that their structure and resources may be used to cause harm. This

would open avenues for corporations to be held criminally liable for omissions. The impact of this

development would be particularly significant for offences that can be committed through

negligence. The feeling however does persist that the conduct elements of an offence should be

attributed to the corporation only through some representative(s) acting within the scope of

employment. Such a limitation would have no play in a scheme of corporate negligence based on

failure to exercise reasonable care.

2. Significance of Corporate culture

It is time that significance be attached to the company culture, both formal and informal policies,

rules and practise. A corporation should be held to have actively committed the conduct element of

an offence when their occurrence was caused or encouraged by the culture of the corporation. Proof

that the corporate culture favoured the commission should satisfy any prescription of subjectiveness

as a fault element of that offence. When intention is the fault element, it can be located in corporate

policies as the best explanation of its policies, rules and practises.

The overall reason for advocating such a policy is that in a way it broadens the scope for corporate

liability in some respects, and narrows it in some respects. It is broader when it becomes possible to

convict a corporation in cases where no individual has committed n offence. It is particularly useful

here since there is no need for the conduct elements of an offence to fall within the scope of some

representative’s employment or authority. It would be more narrow than even identification liability

because the corporation cannot be convicted of an offence unless it was at fault for what occurred.

CONCLUSION
I argue against a thorough going personal liability of decision-makers within the corporation. I argue

that the organisational model is the best, but to establish this, it first needs to be proved that a

corporation is not reducible to propositions about individuals. This view can legitimately and

justifiably be supported.

Corporate Personality: “corporate” corporate guilt?

Is there any such thing as corporate guilt? The answer to this will determine how to proceed in

recasting corporate liability. Are corporations real in the sense that they may be regarded as

substantive moral agents? If the conclusion is in the affirmative, it follows that further attempts

should be made to formulate and identify a truly corporate liability.

As Wells puts it, the effect of imposing corporate structures on human interaction is to make 2+2 =

5.[83] A common way of asserting the reality of this additional substance is to make the ontological

claim that the world is not exclusively a natural place but contains non-natural items such as souls,

capacities of the will independent of mind and body and so on. R.Scruton argues that associations

such as companies subsume and transcend the individuals associated with them. One may ask

whether such “idealist” views can provide a suitable foundation for corporate criminal liability? The

problem here is how to accommodate such persons as Hoffman J who asserts that there is no such

thing as the company as such, no ding and no sich…”[84]

There are theoretical accounts of companies as moral agents in their own right, which are based on a

natural account of the world. French’s theory maintains that if the modus operandi is examined and

properly understood, an agency is revealed which is intrinsic to corporations and not reducible to

the agency, individual or collective, of associated individuals.[85]French maintains that over a period
of time, the decision making process of a company is capable of generating plans and projects with

which an associated individual may have had only a contingent relationship. Thus it may that a

company qua company may be possessed of an intention which no individual associated with it

shares. For French, this is sufficient for moral agencies. So his alternative for a rule of attribution is

to look directly into the company itself and seek a specifically corporate knowledge arising from the

company’s decision-making structures.

Dan-Cohen offers a similar account. He argues that bureaucratic structures with their capacity to

evolve, mutate and reproduce may become freestanding entities in their own right.[86] Ernest

Gellner gives a telling example. He says that if we were to avoid consistently any holistic account of

our institutions, and practises, many tales would take much longer in their telling and there would

often be a feeling that something important has been left out.” The team played well” may require

little unpacking, but if one were to redistribute the judgement by way of an account of each

individual’s performance, the full story would still remain untold.[87]

Consequently, it is entirely appropriate that collective intentionality should be treated as something

to which the criminal law can respond and which it seeks to influence. But should this be done by

saying that companies are real? Should it deem a crime to exist when the constituent elements of the

crime have not been established? Nevertheless, the organisational character of the company may

well have influenced the culpability of an individual associate with the company. Certain processes

should not sidetrack while seeking to disassociate corporate culpability from human culpability. An

improvement n the corporation’s character and a deterrent example to other corporations is

imperative.
Yet, one may argue that the procedures that a company has did not arise spontaneously. Similarly,

the organisation structure is a product of human agency, however sophisticated it may be. So it is

not that obvious why one should look for the culpability for an offence within the company

structure, rather than among those individuals responsible for maintaining that structure. It is

precisely this that I have attempted to refute. It is one thing to employ rules of attribution whereby

the genuine culpability of individuals is attributed as a matter of convention to companies in pursuit

of whatever gains in welfare such an attribution can bring. It is quite another to declare that

culpability has been manifested when the foundations of culpability are nowhere to be found.

Liability strategy

There is a distinctive form of culpability which is specifically corporate and which need not be tied

down to the culpability of any one or more persons associated with the company. Having

established that there is something like “corporate” corporate liability, it is evident then that it is

conceptually inconsistent to continue with the nominalist form of liability strategy.

The identification doctrine does not give an answer. The doctrine rests on the assumption of a

directing mind. It ignores that there may be acts that flow from group norms or corporate policies,

but for which no guilty person can be identified. Also the doctrine demands that the person

identified will be of a certain level – a directing mind and will – which commits the twin follies of

assuming that all acts of employees of a certain level will be instances of corporate norm, and all acts

of employees below that level will not be instances if corporate policy. While the directing mind will

often identify with the corporation acts that flow from group norms, it will be inaccurate.[88]

Liability should not depend upon the identification of those persons responsible for the crime in

question, a task that is difficult at best; let alone on the determination of the perpetrators’ status

within the company. Instead, a model of corporate fault should be adopted. A company should be
criminally liable where a crime is authorised, permitted or tolerated as a matter of company policy

or de facto practise. In this situation, liability should be for the substantive offence that has occurred.

The essence of this conflict is captured by Estey J, “there can be no complete rationalisation of

corporate criminal liability…whether the attempt be made under the banner of vicarious liability or

the identification theory or otherwise. Both doctrines are the product of judicial necessity brought

on by the realities of the modern community.”[89]

BIBLIOGRAPHY

BOOKS

Baxi, U., Dhanda, A., Valiant Victims and Lethal litigation: The Bhopal Case, Bombay:N.M.Tripathi and

Co., 1990.

Braithwaite, J., Corporate Crime in the Pharmaceutical Industry, London: Routledge & Kegan Paul, 1984.

Brickley, K., F., Corporate Criminal Accountability, Melbourne: Law Book House, 1986

Flemming, J.G., The Law of Torts, (8th ed.), Melbourne: Law Book House Compnay, 1992.

Hall, J., General Principles of Criminal Law, Indianapolis: Bobbs-Merrill, 1960, p.359.

Hall, J., General Principles of Criminal Law, Indianapolis: Bobbs-Merrill, 1960,

Hueston, R.F.V., Salmond and Hueston on the Law of Torts, (19th ed.),London: Sweet and Maxwell,1987.

Jamieson, K.M., The Organisation of Corporate Crime, London: Sage Publications, 1994.

Lilly, J.R., (ed.), Criminological Theory: Context and Consequences, (2nd ed.), London: Sage Publications,

1994.

Mcgrath,W.T, (ed.), Crime and its Treatment in Canada, Toronto: Macmillan, 1965.

Nelkon, D., (ed.), The Futures of Criminology, London: Sage Publications, 1994.

Phillips, L., Votley, H.L., The Economics of Crime Control, London: Sage Publications, 1981.

Singh, A., The Law of Tort, Lucknow: Eastern Book Company, 1993,
Wells, C., Corporations and Criminal Responsibility, Oxford: Clarendon Press,1993.

Williams, G., Textbook of Criminal Law, London: Stevens and Sons, 1983

ARTICLES

1. Boyle, C., “Criminal Corporeal Liability,” Crim L.F., Vol.5, No.2-3, 1994.

2. Colvin, E., “Corporate Personality and Crimianl Liability,” Crim.L.F., Vol.6, No.1, 1995.

3. Field, S., Jorg, N.,“Corporate Liability and Manslaughter: Should we be going

Dutch,” Crim.L.R., Mar 1991.

4. Gobert, J., “Corporate Criminality :New Crimes for the Times,” Crim.L.R., Oct. 1994.

5. Hanna, D., “Corporate Criminal Liability,” CLQ, Vol.31, No.3, 1988-89.

6. Huff, K.B. “The Role of Corporate Compliance Programmes in Determining Corporate

Criminal Liability: A suggested Approach,” Columbia Law Review, Vol.96, No.5, 1996.

7. Jackson, B.S., “Storkwain: A Study in Strict Liability and Self-Regulation,” Crim.L.R., Dec

1991.

10. Khanna, V.S., “Corporate Criminal Liability, What purpose does it serve?” Harvard Law

Review, Vol.109, No.7, 1996.

11. McColgan, A., “The Law Commission Consultation Document on Involuntary Manslaughter –

Heralding corporate liability?” Crim.L.R., Aug 1994.

12. Paulus, I., “Strict Liability: Its Place in Public Offences,” CLQ, Vol.20, No.3, 1977-78.

13. Sullivan, G.R., “The Attribution of Culpability to Limited Companies,” Cambridge Law

Journal, Vol.55, No.3, 1996.

14. Wells, C., “Corporate Manslaughter: A Cultural and Legal Forum,” Crim.L.F., Vol.6, No.1,

1995.
15. Wells, C., “The Corporate Manslaughter Proposals: Pragmatism, Paradox and

Peninsularity,” Crim.L.R., Aug. 1996.

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[1] Brickley, K., F., Corporate Criminal Accountability, Melbourne: Law Book House, 1986, 410.

[2] Three requirements must be satisfied in order to impose liability on a corporation using the

doctrine of respondeat superior. (1) A corporate agent must have committed an illegal act with the

requisite state of mind. Alternately, the mens rea can be shown on the basis of collective knowledge

of the employees as a group. (2) The agent must have acted within the scope of employment. Even

if the corporate member does something that she is expressly forbidden to do, the corporation will

still be responsible for her wrongful and unauthorised acts. (3) The agent must have intended to

benefit the company, though the company need not have necessarily benefited from it.
This forms the basis of vicarious liability under which the employer is held responsible for the acts

of her employees. See generally Dias, R.W.M., Markesinis, B.S., Tort Law, (8th e.), Oxford:

Clarendon Press, 1992, pp.378-397.

[3] 212 US 481 (1909). The court stated that “the act of the agent, while exercising the authority

delegated to him…may be controlled, in the interest of public policy, by imputing his act to his

employer and imposign penalties upon the corporation for which he is acting.”

[4] The use of tort law concepts in criminal law was highly criticised since critics argued that the two

bodies of law have different purposes.

[5] Khanna, V.S., “Corporate Criminal Liability,” Harvard Law Review, Vol. 109, No. 7, 1996,

pp.1482-1485.

[6] AIR 1964 Bom.195.

[7] Ibid at 198.

[8] This principle has been observed in a number of cases, Rex v. I.C.R. Haulage Ltd., (1944 ) 1 KB

551;

Karthik Chandra v. Harsha Mukhi Dasi, AIR 1943 Cal.345(FB); Darbari Lal v. Dharam Wati, AIR 1957

All 541 (FB); Adding Machines India Pvt. Ltd. v. The State, 1987 (1) CHN 359, Kusum Products Ltd.

v. S.K.Sinha, 1980 (II) CHN 326; East India jute and Hessian Exchange Limited v. A.K.Mondal, 1989 C

CR L R 171, and more recently in 1992 in A.K.Khosla v. T.S.Venkatesan, AIR 1992 SC 1448.

[9] 1975 Cri L.J. 1148.

[10] The courts in a number of cases have taken the same view regarding mens rea offences; M/s

Champa Agency v. R.Chowdhury, 1974 CHN 400, and Sunil Chandra Bannerjee v. Krishna Chandra Nath,

AIR 1949 Cal 689.

[11] (1996) 6 SCC 1456.

[12] AIR 1984 SC 1086.

[13] M.C.Mehta v. Union of India, (1987) 1 SCC 395.

[14] Lilly, J.R., (ed.), Criminological Theory: Context and Consequences, (2nd ed.), London: Sage

Publications, 1994, pp.3-6.

[15] Williams, G., Textbook of Criminal Law, London: Stevens and Sons, 1983, p.931.

[16] Smith, J.C., Hogan, B., Criminal Law, (7th ed), London: Butterworths, 1992, p.184.

[17] Such a concept is to be found in Hammurabi’s Code also, prior to its application in common

law.

[18] In South Africa, vicarious liability has been adopted by statute. In the United States, federal

courts have developed vicarious liability as a matter of common law.

[19] Singh, A., The Law of Tort, Lucknow: Eastern Book Company, 1993, pp.76.

[20] Flemming, J.G., The Law of torts, (5th ed.), Sydney: Law book Company Limited, 1977, pp354-

355.

[21] (1983), 7 C.C.C., p.82 C.R.

[22] Ibid at 85.

[23] If vicarious liability is to be the general rule of attribution, in case of serious offences, well run

companies should be given an opportunity to distance the organisation from an offence perpetrated

by one or more of its employees. Also, a company involved in high risk processes should be

permitted to argue that despite a grossly negligent act of one or more of its personnel, its safety

procedure and personnel is the most that could reasonably be demanded of it. It is proposed that

companies should be accorded the defence of due diligence for non-regulatory offences.

[24] Sullivan, G.R., “The Attribution of Culpability to Limited Companies,” Cambridge Law

Journal, Vol.55, No.3, 1996, pp.515-545.

[25] www.the_law.crime2.html
[26] Colvin, E., “Corporate Personality and Criminal Liability,” Criminal Law Forum, Vol.6, No.1,

1995, pp.6-7.

[27] Supra n.16 at 515.

[28] H.L.Bolton (Engineering) Co. v. T.J.Graham & Sons Ltd., (1957) 3 All ER 624.

[29] Tesco Supermarkets Ltd. v. Nattrass, 1972 App. Cas. 153 at 171.

[30] Ibid.

[31] Ibid.

[32] www.milbank.com

[33] www.wcrime.stm

[34] It is different form vicarious liability in that in vicarious liability, one can be vicariously liable for

the acts of and the state of mind of another, whereas absolute liability excludes by definition, state of

mind as a consideration.

[35] Canadian Dredge & Dock Co. Ltd. v. The Queen, (1985) 19 C.C.C. (3d) 1 at p.8.

[36] Ibid at 9.

[37] Supra n. 24 at 60.

[38] Hall, J., General Principles of Criminal Law, Indianapolis: Bobbs-Merrill, 1960, p.359.

[39] Such as the Bhopal gas disaster in 1984, and the Shriram oleum gas leak in 1987 for example.

[40] Paulus, I., “Strict Liability: Its Pace in Public Offences,” CLQ, Vol.20, No.3, 1977-78, p.448.

[41]Supra n. 24.

[42] 88 Crim. App. 10 (Q.B. Div’l Ct. 1987).

[43] (1986), 1 Y.R.3(YTCA).

[44] Baxi, U., Dhanda, A., Valiant Victims and Lethal litigation: The Bhopal Case, Bombay:N.M.Tripathi

and Co., 1990, p.20.

[45] (1995) 2 A.C.500.

[46] Ibid at 511.

[47] Phillips, L., Votley, H.L., The Economics of crime Control, London: Sage Publications, 1981 pp.35.

[48] (1941) 76 C.C.C. 196.

[49] (1915) A.C.705.

[50] Supra n.5 at 1274.

[51] Field, S., Jorg, N., “Corporate Liability and Manslaughter: Should we be going

Dutch,” Crim.L.R., Mar 1991,p161.

[52] Supra n. 26 at 19.

[53] On the contrary, aggregation has not been accepted in the Commonwealth countries. Proposals

to introduce some form of aggregation have been made in Australia and Canada in cases of

negligence.

[54] 821 F.2d at 856.

[55]Supra n.16.

[56] www.localsource.net/whiteco2.htm

[57] McColgan, A., “The Law Commission Consultation Document on Involuntary Manslaughter –

Heralding corporate liability?” Crim.L.R., Aug 1994, p550.

[58] http:// www.localsource.net/colscript

[59] Supra n. 12.

[60] www.localsource.net/phxscripts

[61] Criminal law has generally been reluctant to create liability for omissions. The general principle

of criminal liability for an offence is that there must be some special reason for recognising a duty to

act, aver and above the moral imperative to prevent the imperative of harm. Additionally, there are

specific duties under regulatory statues and other statutory provisions.

[62] Canadian Dredge and Dock Co. v. R., (1985) 1 S.C.R. 662 at 713-714.
[63] The scope of this duty may be determined by ordinary principles of negligence, by reference to

the forseability of unjustifiable harm occurring as a result of the operations of the corporation.

[64] Braithwaite, J., Corporate Crime in the Pharmaceutical Industry, London: Routledge & Kegan Paul,

1984, p.65.

[65] Mcgrath,W.T, (ed.), Crime and its Treatment in Canada, Toronto: Macmillan, 1965, pp.12-16.

[66] Canada, despite this prima facie argument has developed a concept of corporate mens rea.

[67] To describe it in terms of aggregation would be misleading if several persons involved in the

formulation of ter policy held deep reservations about its outcome, and were seeking to subvert it.

[68] Say for example, the intention of a legislature in adopting particular words, phrases or

provisions is not necessarily the intention of any single member or any group of members of that

legislature.

[69] Boyle, C., “Criminal Corporeal Liability,” Crim L.F., Vol.5, No.2-3, 1994, p.716.

[70] www.smpcollege.com

[71] The Australian Model Criminal Code seeks to make true corporate fault the basis for criminal

liability for offences of negligence and for offences involving subjective fault elements. The code

does so in a way that can be viewed as recognising a distinctive corporate form of recklessness,

based upon the presence of a corporate culture favouring the commission of offences.

[72] Wells, C., “Corporate Manslaughter: A Cultural and Legal Forum,” Crim.L.F., Vol.6, No.1,

1995, p.548.

[73] But this needs to be rejected for reasons as seen in the previous chapter.

[74] Jamieson, K.M., The Organisation of Corporate Crime, London: Sage Publications, 1994, p.8.

[75] www.thelaw.crime2.html
[76] Huff, K.B. “The Role of Corporate Compliance Programmes in Determining Corporate

Criminal Liability: A suggested Approach,” Columbia Law Review, Vol.96, No.5, 1996, pp.1259-

1260.

[77] Supra n. Wells, C., “Corporate Manslaughter: A Cultural and Legal Forum,” Crim.L.F., Vol.6,

No.1, 1995, p.48.

[78] See generally p.21.

[79] Gobert, J., “Corporate Criminality : New Crimes for the Times,” Crim.L.R., Oct. 1994, pp.722-

735.

[80] 821 F.2d at 856.

[81] Supra n.26 at 40-41.

[82] The Australian Code makes a distinction between forms and levels of subjective fault. But I feel

that this is rather conservative. A Corporation should be liable for an offence of negligence on the

basis of its culpable omission to prevent the occurrence of the conduct elements of the offence,

provided the degree of negligence is sufficient for criminal liability.

[83] Wells, C., Corporations and Criminal Responsibility, Oxford: Clarendon Press, 1993, p.88.

[84] Meridian Global Finance v. Management Asia Ltd. (1995) 2 A.C.500.

[85] Fench, Collective and Corporate Responsibility, New York: Sage Publications, 1974, p.31. To French,

this is cahracterised by internal organisation and/ or decision procedures by which courses of

concerted action can be chosen; enforced standards of standard different from and more stringent

than those applying in the wider community; and members filling differing defined roles by virtue of

which they exercise power over other members.

[86] Dan-Cohen, Rights, Pesons and Organisations A Legal Theory for a Bureaucratic Society, California:

Clarendon Press, 1986, pp.35-62.

[87] Gellner, E., “Holism v. Individualism,” in Broadbeck, M., (ed), Readings in the Philosophy of the

Social Sciences, New York: Clarendon Pess, 1968, p.258.

[88] Hanna, D., “Corporate Criminal Liability,” CLQ, Vol.31, No.3, 1988-89,pp.452-80.

[89] 1968 (U.K.) c. 29.

TABLE OF CASES

A.K.Khosla v. T.S.Venkatesan, AIR 1992 SC 1448.

Adding Machines India Pvt. Ltd. v. The State, 1987 (1) CHN 359,

Canadian Dredge & Dock Co. Ltd. v. The Queen, (1985) 19 C.C.C. (3d) 1.

Darbari Lal v. Dharam Wati, AIR 1957 All 541 (FB).

Delhi Municipality v. J.B.Bottling Co. 1975 Cri. L.J. 1148.

East India jute and Hessian Exchange Limited v. A.K.Mondal, 1989 C CR L R 171.

H.L.Bolton (Engineering) Co. v. T.J.Graham & Sons Ltd., (1957) 3 All ER 551.

Karthik Chandra v. Harsha Mukhi Dasi, AIR 1943 Cal.345(FB).

Keshub Mahindra v. Union of India, (1996) 6 SCC 1456.

Kusum Products Ltd. v. S.K.Sinha, 1980 (II) CHN 326;

Leonard’s Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd, 1915 AC 705.

M.C. Mehta v. Union of India, AIR 1984 SC 1086.

M.C.Mehta v. Union of India, (1987) 1 SCC 395.

M/s Champa Agency v. R.Chowdhury, 1974 CHN 400,

Meridian Global Finance v. Management Asia Ltd. (1995) 2 A.C.500.

New York Central & Hudson River Railroad Co. v. United States, 212 US 481 (1909).

R. v. Burt, (1987), 38 C.C.C., (3d) 299.

R. v. Dawson City Hotels LTd., (1986), 1 Y.R.3(YTCA).

R. v. Fane Robinson Ltd(1941) 76 C.C.C. 196.

 R. v. H.M.Coroner for East Kent 88 Crim. App. 10 (Q.B. Div’l Ct. 1987).

R. v. Stevanovich (1983), 7 C.C.C. 82.

Rex v. I.C.R. Haulage Ltd., (1944 ) 1 KB 551.

State of Maharashtra v. Syndicate Transport Co., AIR 1964 Bom.195.

Sunil Chandra Bannerjee v. Krishna Chandra Nath, AIR 1949 Cal 689.

Tesco Supermarkets Ltd. v. Nattrass, 1972 App. Cas. 153 at 170.

United States v. Bank of New England, 821 F.2d.

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