Lafarge judgment paves the way for more companies to be held accountable for profiting from criminal organisations

The French Supreme Court’s judgment against Lafarge SA marks the first time a parent company has been charged with complicity in crimes against humanity, and the first time the French courts have recognised criminal liability for acts of a foreign subsidiary.

The case was brought by 11 Syrian former employees of Lafarge Cement Syria (LCS) - a subsidiary of the French company Lafarge SA – together with the European Centre for Constitutional and Human Rights (ECCHR) and Sherpa, who filed a criminal complaint against Lafarge SA, alleging financing of a terrorist enterprise, complicity in war crimes and crimes against humanity (CAH), forced labour, and deliberate endangerment of people's lives.

In June 2019, Lafarge SA was indicted by French investigative judges for complicity in crimes against humanity, but the appeal court dropped the charges in November of the same year. ECCHR and Sherpa appealed, and the French Supreme Court (the Cour de Cassation) handed down its judgement on the 7th of September 2021.

Significance of the judgment against Lafarge SA

This is a landmark judgement and opens the door for future litigation of this type. The court’s helpful and wide interpretation of ‘complicity’ does not require direct involvement with the criminal actions and paves the way for more companies to be held accountable for profiting from criminal organisations.

Additionally, French courts have often been reluctant to find parent companies liable for actions of their subsidiaries, especially those based abroad. This judgment takes a significant step towards closing that accountability gap. As stated by ECCHR’s legal advisor, Cannelle Lavite, this “decision sends an important message to all companies that profit from or fuel armed conflicts and claim that their business activities are neutral” .

The Supreme Court’s finding does not find Lafarge SA guilty of CAH. Rather, the matter has been referred back to the investigative courts for them to re-assess complicity as per the Supreme Court’s interpretation. The appeal court will also hand down a new finding on charges of deliberate endangerment of people's lives. This judgment adds to the growing body of jurisprudence, around the world, ensuring accountability for parent companies in the civil and criminal sphere; from Nevsun in Canada, Milieudefensie in Netherlands and the UK Supreme Court judgments in Leigh Day cases Vedanta and Okpabi.

Background on the case against Lafarge

The case brought against Lafarge relates to crimes that were said to have been committed following the 2010 construction of a cement-plant factory in Jalabiya, North Syria. This factory was held by LCS, a company in which Lafarge SA has a shareholding of over 98%. Armed groups, including ISIS, fought on the territories around the factory between 2012 and 2015.

Foreign workers were evacuated to Egypt in 2012, and between 2012 and 2014, Syrian employees ran the factory. Investigations revealed that LCS paid a total of €13 million to the armed groups in order to keep the factory running. Lafarge eventually fully evacuated the factory in September 2014, a couple of months before ISIS took it over.

The rulings by the French Supreme Court

The French Supreme Court considered two main issues:

1. Could ECCHR and Sherpa participate as claimants in the litigation?
2. Did investigations into Lafarge indicate complicity in wrongdoing?

The main questions were posed in relation to the second issue. In their appeal, the Claimants had asked whether complicity in crimes against humanity required an intention to be associated with the commission of the crimes.

In relation to the first issue, the Supreme Court held that only the ECCHR could act as a claimant in relation to the charge of complicity for crimes against humanity, as the organisation promotes international humanitarian law, which includes fighting war crimes. Conversely, Sherpa’s focus on economic crimes does not encompass crimes against humanity.

The Supreme Court then held that the appeal court erred in law by dropping investigations for complicity in CAH, finding that a party could be complicit in CAH even if it did not intend to be associated with their commission. Rather, all that is needed is (a) knowledge of the preparation or commission of these acts and (b) help or assistance facilitating them. It is not necessary to belong to the criminal organisation nor to adhere to the conception or execution of the plan.

The court found that the payment of millions of dollars to an organisation of exclusively criminal character amounted to ‘complicity’, and the question of whether Lafarge intended to pay to pursue commercial (rather than criminal) activity was deemed irrelevant. Further, the court confirmed that a party which knowingly funds a terrorist group can be liable for financing a terrorist enterprise, regardless of whether the party intends for the money to be used for terrorism.

However, the charge of deliberate endangerment of life was dropped. This charge was against Jean-Claude Veillard, ex-safety director of Lafarge SA. ECCHR argued that in this position M. Veillard had the competence, authority and means to establish an evacuation plan and keep the employees safe. Yet the court held on the facts that as safety and not security director, M.Veillard was only in charge of evaluating potential threats and did not have the power to ensure the employees’ safety.

Lafarge SA had also appealed the lower court’s decision, asking the following two questions in relation to the charge of deliberate endangerment of people’s lives:

1. Can the employees of a foreign subsidiary be considered employees of the French parent company?
2. Do the security obligations imposed on the employer by French law apply?

The Supreme Court held that the appeals court did rightly find evidence of a link between the Syrian employees and the French parent company, or evidence of interference by the parent company in the management of the subsidiary so as to render it nonautonomous. Despite this, it found that the appeals court should not have assumed that the French Labour Code applied to Syrian employees at LCS. Instead, it should have looked at international law to determine if there was an existing obligation for the employer to provide security to its employees.

Consequently, the Supreme Court has sent this investigation back to the appeals court to decide this point.

Sources

• Agence Française de Presse, ‘French firm Lafarge loses bid to dismiss 'crimes against humanity' case in Syria’ 7.09.21 
• Arret n 865 7.9.21
• Arret n 866 7.9.21
• Arret n 868 7.9.21 
• ECCHR, ‘Historic victory before French Supreme Court on the indictment of multinational Lafarge for complicity in crimes against humanity in Syria’ 7.9.21 
• Cour de Cassation, 'Communique: Information judiciaire sur les activités d'une society française pendant la guerre civile en Syrie' 7.9.21 
• WTS, Societe d’avocats au barreau de Paris, ‘Liability of parent company for the acts of its subsidiary’