Should I stay or should I go: a step-by-step guide
Operating business in conflict-sensitive areas requires a dedicated strategy. It is all about accounting for the complexity of the situation, while striking an efficient balance between the company’s objectives and its and its employees’ legal, financial, and physical integrity. An exit plan anticipating when and how it will leave the area will be an integral part of this strategy.
This guide, dedicated to legal risk, aims at filling the gap the absence of such a strategy created for companies operating in conflict-sensitive areas and facing a crisis.
1. Understand the relevant international, regional and domestic law
Start with a complete overview of the law applying to armed conflict impacting businesses. For companies operating in conflict zones, the most pressing risk is that deriving from entanglement with war crimes and crimes against humanity. The two charges differ on two grounds. War crimes may only be committed during an armed conflict, when crimes against humanity may take place in the absence of one. In addition, a widespread or systematic attack against civilian population is required for crimes against humanity to be prosecuted. Both crimes may be prosecuted on the international and national levels. See appendix 1.
International prosecutions
At the international level, the International Criminal Court (ICC) may open investigations in situations of armed conflict, exposing corporations operating on the territory of states involved in armed conflict to legal risk. The ICC may prosecute the criminal acts that may amount to crimes against humanity including murder, torture, and enforced disappearances, and war crimes, such as wilful killings, directing attacks against civilians or torture. The court has no jurisdiction over legal persons, and may only prosecute individuals who acted on behalf of the company.
The main risk for corporations’ executives lies in potential prosecutions on the basis of two modes of liability. On the one hand, if they “aid, abet or otherwise assist” the commission of war crime or crime against humanity, according to Article 25(3)(c) of the Rome Statute; on the other hand, if, according to Article 25(3)(d), they contribute to the crime committed or attempted by a group of persons acting with a common purpose.
Domestic prosecutions
Two risks of prosecutions arise for companies at the domestic level.
First, the company operating in conflict-affected area and its executives are at risk of prosecution in their own jurisdiction. The legislation of most jurisdictions includes the condemnation of complicity of crimes against humanity or war crimes. In France, for instance, the Penal Code lists criminal acts that may amount to war crimes in its articles 461-1 to 461-31 and those that may amount to crimes against humanity in its article 212-1.
Second, the company operating in conflict-affected area and its executives are at risk of prosecution by a third jurisdiction prosecuting on the basis of the principle of universal jurisdiction, that posits that the gravest crimes, including war crimes and crimes against humanity, may be prosecuted by a jurisdiction that has no link to them. For the most part, the principle has been relied upon by European courts, including the Spanish, British, French and German ones, to prosecute cases involving grave crimes. Thus, if the parent company is not prosecuted in its own jurisdiction, another court may endeavour to open a case.
Non-binding standards
In addition, non-binding standards, such as the UN Guiding Principles on Business and Human Rights (UNGPs), and the OECD Guidelines for Multinational Enterprises, may open the way to complaints.
See appendix 1.
2. Risk assessment
When facing the decision to stay or leave, consider the level of exposure the company is facing. Compile a complete list of your company’s engagements with parties to the conflict, including all levels of your supply chain, and the most remote links. Understand the legal risk arising from the exposure. Account for the applicable penalties, including imprisonment, the maximum amount of fine incurred and impact to the reputation. Account for any potential loss of funding this might incur, and how harmful they may be to the company. You may use the chart enclosed to get a better understanding of the level of exposure the operations represent for the company.
See appendixes 2 and 3.
3. Weigh the implications of staying and leaving
While leaving a conflict-area may appear urgent, it may not always turn out to be the most compliant option, and departure may present its own set of risks.
For instance, the disengagement of pharmaceutical industry from a conflict-affected area, that would result in shortage of essential products, such as medicines for civilians, may amount to a violation of international humanitarian law.
The decision to leave must, in addition, be informed by the circumstances that will surround the departure. If the only way to depart is to sell the operations to individuals or entities perpetrating violations, then departing may instead increase the level of exposure to risk. Thus, Norwegian company Telenor’s decision to disengage from Myanmar soon after the 2021 coup in Myanmar led to NGOs filing a complaint before the Norwegian National Contact Point for the OECD Guidelines for Multinational Enterprises. They argue that the sale of the operations did not meet the OECD Guidelines’ standards of responsible disengagement. Additionally, the sale led to the filing of a complaint before the Norwegian Data Protection Authority, contending it would result in the breach of the EU’s General Data Protection Regulation (GDPR), thus substantially increasing the company’s exposure to criminal risk.
4. Don’t just leave
The conditions surrounding the company’s departure must also be carefully thought through, and regulations given proper consideration. For instance, the domestic labour law applicable to the company may provide for the employer's obligation to ensure the security of its employees, as is the case in France. The company deciding to leave a conflict-affected area would therefore have to organise the evacuation of the employees sent to work overseas from the zone and support local ones. While doing this, the company must pay careful attention not to participate in violations to international humanitarian law, in particular in any scheme resulting in the forced displacement of civilian populations, that may be constitutive of war crimes.
Concluding remarks
No compliance process is complete if you cannot demonstrate you abided by it. Document every step you take to comply with your exit strategy:
Emails,
Text messages,
Dated meetings minutes,
Orders,
Flight tickets,
Invoices,
Sales documents.
Favour written over oral instructions and discussions. Store all the documents safely. Ensure your documentation is clear, straightforward and does not leave room for ambiguity.
Finally, while this short guide aims at filling the gaps the absence of a strategy drafted ahead of the crisis may create, every corporation operating in conflict-sensitive areas must have an exit strategy ready, anticipating when and how the company should leave. The document will detail the company’s response in reaction to a set of signals building up to the crisis, and, eventually, the conditions that will result in the decision to leave.