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Penalizing corporations for environmental offences : a comparative study of the Canadian experience and… Riihijärvi, Marja Kristiina 1992

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PENALIZING CORPORATIONS FOR ENVIRONMENTAL OFFENCES:A COMPARATIVE STUDY OF THE CANADIAN EXPERINCE ANDTHE FINNISH LAW PROPOSALbyMARJA KRISTIINA RIIHIJARVILL.B., The University of Helsinki, Finland, 1990A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THEREQUIREMENTS FOR THE DEGREE OF MASTER OF LAWSinTHE FACULTY OF GRADUATE STUDIES(Faculty of Law)We accept this thesis as conformingto the required standardTHE UNIVERSITY OF BRITISH COLUMBIAJanuary 1992© Marja Kristiina Riihijarvi, 1992In presenting this thesis in partial fulfilment of the requirements for an advanceddegree at the University of British Columbia, I agree that the Library shall make itfreely available for reference and study. I further agree that permission for extensivecopying of this thesis for scholarly purposes may be granted by the head of mydepartment or by his or her representatives. It is understood that copying orpublication of this thesis for financial gain shall not be allowed without my writtenpermission.(Signature)Department ofThe University of British ColumbiaVancouver, Canada-60A9,-7c2. DE-6 (2/88)iiABSTRACTThis thesis reviews some of the issues involved withpenalizing corporations in environmental cases. The Canadianexperience and the Finnish law proposal on corporate criminalliability form the basis for this study.Imposing criminal liability on corporations and usingcriminal sanctions in environmental protection have been opposedby a number of legal scholars. Both the theoretical and practicalfeasibility of holding a corporate entity criminally liable hasbeen questioned. The criticism addresses such issues as assigningliability to a "mindless" entity, and fashioning an appropriatesentence to a "body" that cannot be imprisoned, and whose formvaries from a multinational corporation to a company comprised ofa single individual. Traditional penal sanctions have also beencriticized for their inability to compensate the victim or repairthe damaged environment.This thesis addresses and challenges this criticism byattempting to design a system of corporate criminal liabilitythat would efficiently comprise the problem of corporate non-compliance with environmental legislation. While it isacknowledged that penal measures cannot provide an exclusivesolution against unwanted corporate environmental behaviour, itis premised that such measures have their place among othercontrol strategies. Therefore, instead of giving in to themounting criticism, this thesis attempts to further develop theexisting law on corporate criminal liability and seek solutionsiiito some of the problems surrounding the issue of penalizingcorporations in environmental cases.The existing law studied in this thesis consist of theCanadian experience and the Finnish law proposal on corporatecriminal liability. The two approaches are introduced in chapters2 and 3 of the thesis. The two systems are then evaluated inlight of three social functions of law in chapter 4; thefunctions of restoring equilibrium to the social order,maintaining predictability, and molding and advancing the moraland legal conceptions and attitudes of a society are used as the"measuring stick" against which the Canadian experience and theFinnish law proposal are evaluated.The evaluation discloses both strengths and weaknesses inthe two systems of corporate criminal liability. The mostpredominant problems appear to involve the question about thevery foundation for imposing penal liability on a non-humanoffender, and the difficulties in designing an efficient and justsentence to the corporate offender. Other difficult issuesrevealed in the evaluation are the question about the entitiesliable, and the interrelationship between the corporation and itsindividual agent.Chapter 5 confronts these problems and suggests some ideasfor the development of the law. The most comprehensive change tothe present corporate criminal liability schemes is in theproposition that corporate criminal liability should be foundedon the blameworthiness entertained in corporate policies andoperations rather than on the guilt of an individual corporateivagent. Treating blameworthy corporate policies and structures asa proof of genuine corporate guilt emphasizes the collectivenature of corporate offences, and promotes uniform and fairtreatment of different corporations. Such a system may alsoinspire more uniform enforcement by forcing the prosecutor toselect only those cases that imply genuinely blameworthycorporate policies behind the illegal conduct.With regard to sentencing, it is suggested in chapter 5 thatinstead of resorting to deterrence as the sole sentencingobjective, an assortment of objectives should be employed. Inaddition to deterrence, a sentence should reflect thecondemnatory nature of the offence by clearly denouncing theunwanted behaviour, and where appropriate, a sentence should bedesigned to encourage compensation and redress. In order to meetthese diverse goals, a variety of measures should be employed andthe exclusive use of the fine should be rejected. The principleof proportionality is recommended as the leading principle forthe apportionment of a sentence.VTABLE OF CONTENTSAbstract^ iiTable of Contents^ vAcknowledgments ix1. INTRODUCTION^ 11.1. Corporations and Environmental Law: The Problem ofCompliance 11.2. Corporations in the Penal Spotlight^ 51.3. Legislative Framework^ 81.4. What Are Good Laws Made of?^ 121.5. The Plan of the Thesis 132. THE CANADIAN EXPERIENCE^ 152.1. Theoretical Framework 152.1.1. Theories of Liability^ Vicarious liability^ Identification doctrine 182.1.2. Applying Corporate Criminal Liability toEnvironmental Cases: The Division of Offences 192.1.3. Conditions for Corporate CriminalLiability^ Whose conduct invokes corporateliability? 23A) In absolute and strict liabilityoffences^ 23B) In mens rea offences^ 25C) Question of identification^ What kind of conduct is attributableto the corporation?^ 312.1.4. Corporate Liability vs. Individual Liability^35vi2.1.5. Entities Liable^ 402.2. Sentencing Corporations in Environmental Cases^432.2.1. Sentencing Rationale, Objectives andPrinciples^ 442.2.1.1. Retribution^ 462.2.1.2. Social utility 512.2.1.3. Rights of the victim^ 592.2.2. Sentencing Criteria^ 612.2.2.1. Offence-related factors^ 62A) Harm 62B) Intent^ 66C) Fruits of the crime 682.2.2.2. Offender-related factors^70A) Size and wealth of the corporation 70B) Corporate behaviour 72C) Recidivism^ 742.2.2.3. Other factors 76A) Laxity of government officials^76B) The sensitivity of the environment 77C) Political and socioeconomicconsiderations^ 782.2.3. Sentencing Options 812.2.3.1. The Fine^ 812.2.3.2. Publicity 852.2.3.3. Redress 87A) Restitution and compensation^88B) Remedial orders^ 892.2.3.4. Forfeiture^ 923. THE FINNISH LAW PROPOSAL ON THE CRIMINAL LIABILITY OFCORPORATE BODIES^ 953.1. Background 973.1.1. The Penal Code and Individual Liability^973.1.2. The Present Practice of ControllingCorporations^ 983.1.2.1. Sanctioning a corporation^993.1.2.2. Attributing liability withina corporation^ 104vii3.1.3. Justifications for Corporate Criminal Liability 1053.1.4. The Development of Chapter 9^ 1073.2. The Law Proposal^ 1083.2.1. The Setting 1083.2.2. Theoretical Framework^ 1103.2.2.1. Entities liable 1103.2.2.2. The criteria for corporate criminalliability^ 1153.2.2.3. The relationship between the corporationand the individual agent^1193.3. Sentencing Corporations^ 1203.3.1. Sentencing Rationale and Principles^1213.3.2. The Corporate Fine^ 1253.3.3. Sentencing Criteria 1273.3.4. Waiving of the Measures^ 1314. CORPORATE CRIMINAL LIABILITY AND SOCIAL FUNCTIONS OF LAW:EVALUATION OF THE CANADIAN EXPERIENCE AND THE FINNISH LAWPR POS L 1324.1. Restoring the Equilibrium^ 1344.1.1. Reaffirming the Norms Set in EnvironmentalLegislation^ 1354.1.1.1. Entities liable^ 1364.1.1.2. Corporate blameworthiness^1394.1.1.3. Evasion of liability 1414.1.1.4. Interrelationship between corporateand individual liability 1464.1.1.5. Sanctions^ 1514.1.2. Redress to the Victim and the Environment^1574.2. Maintaining Predictability^ 1624.2.1. Precise Rules of Liability^ 1644.2.2. Clear Sentencing System 1674.2.3. Consistent and Uniform Enforcement^170viii4.3. Creating Environmental Responsibility^ 1744.3.1. The Normative Perspective to Compliance^1754.3.2. Corporations and "Internalized Obligations"^1775. TOWARDS AN IDEAL: SOME SUGGESTIONS FOR THE IMPROVEMENTOF THE LAW^ 1835.1. Corporate Liability^ 1845.1.1. The Basis for Liability^ 1855.1.2. The Question of Guilty Mind 1885.1.2.1. Guilty individual^ 1895.1.2.2. Guilty corporate policy^ 1925.1.3. The Role of Individual Liability 1985.1.4. Entities Liable^ 1995.2. Sentencing^ 2015.2.1. About the Objectives^ 2025.2.2. The Quality of a Sanction: Sentencing Options 2065.2.2.1. The fine^ 2065.2.2.2. The equity fine^ 2095.2.2.3. The day-fine 2105.2.2.4. Adverse publicity 2125.2.2.5. Forfeiture 2155.2.2.6. Redress^ 2175.2.3. The Quantity of a Sanction: SentencingCriteria^ 2195.2.3.1. Harm 2225.2.3.2. Culpability^ 2255.2.3.3. Equity 2265.3. Finally^ 228Appendix^ 233ACKNOWLEDGMENTSI gratefully acknowledge the supervision and advice ofProfessors Ian Townsend-Gault and Christine Boyle. I wouldalso like to express special thanks to Professors PekkaKoskinen and Raimo Lahti from the University of Helsinki,Finland, for their help and support.I want to thank the British Columbia Law Foundation forits financial support, and Elizabeth and David Mutka fortheir comments and corrections on the language.Finally, special thanks for two special people, DonBulmer and Catherine Matte, whose love and frienship havemade my stay in beautiful Vancouver so very enjoyable.ix11. INTRODUCTION1.1. Corporations and Environmental Law: The Problem ofComplianceContinued influence on the economy by large national and trans-national enterprises and organizations, and the consequentincreased risk to the public posed by the large-scale intentionalor unintentional harmful effects of the activities of suchorganizations, will require more attention to be devoted to waysin which society, through law, can control and limit such risks. 1Since the end of the Second World War, corporations haveacquired an increasingly crucial position in society to the pointthat essentially all economic activity is greatly influenced bycorporate behaviour. The standard oe living in the Western worldhas been accomplished largely through corporations whose many anddiverse activities affect virtually all aspects of our lives fromthe food we eat to the air we breathe.The primary force behind corporate activities is theambition to realize profit. To a great extent, this profit-makingprocess is based on utilizing our natural environment; naturalresources provide raw materials and energy essential forproduction, and water, air, and soil make depositories forwastes. As a result of this exploitation of the environment, wereceive goods and services, jobs and tax revenues - all essentialelements of an economically healthy society. A less desired butan inevitable by-product of pursuing profit is environmentaldegradation. Although by no means the only source, corporations1. Government of Canada, The Criminal Law in Canadian Society.(Ottawa: Government of Canada, 1982), at 25.2do contribute a considerable part of environmental damage. 2Corporations handle the most dangerous types of pollutants, suchas radioactive waste or heavy metals, they exploit vast amountsof natural resources and cause equally vast amounts of waste andpollution as a result of their production methods. 3 Thesenegative by-products have become a significant problem during thesecond half of the 20th century; today's news is filled with oiland toxic spills, the air we breath is increasingly polluted, andeven some of the renewable resources are threatened due toextensive exploitation. It is evident that "[o]ne of the mostpressing issues confronting modern industrial man is his concernover the natural environment." 4The increased concern for the well-being of our naturalenvironment has brought about a multitude of laws and regulationsthrough which governments attempt to control corporateenvironmental behaviour by setting legitimate limits on profit-making. Consequently, a modern corporation acts in an economythat is highly regulated. As a result, the corporation is pulledin different directions by two opposing forces: the restrictinglegislation and the corporate ambition to make profit. Since2. Although there do not appear to be any empirical studiesestablishing the integrity of this statement, several authorshave accepted the belief that corporations are predominantlyresponsible for environmental degradation. See e.g., Dianne Saxe,Environmental Offences, Corporate Responsibility and ExecutiveLiability. (Aurora: Canada Law Book Inc., 1990), at 21. For ageneral discussion on the impact of corporations, see MarshallClinard, Corporate Corruption. The Abuse of Power. (New York:Praeger Publishers, 1990), at 1-6.3. Saxe, ibid. at 21-22.4. R. v. Lopes, 5 Nov. 1986, unreported (Ont.Prov.Ct.), as quotedin ibid. at 1.3corporate activity is steered towards economic benefit,corporations naturally choose courses of action based on acalculation of potential costs and benefits. That is, potentialcosts and benefits in short-term. Corporate vision generally doesnot extend beyond a couple of decades. These kind of short-termprofit-making policies do not encourage installing expensivepollution control or conservative resource use. While controllingpollution or resource exploitation is expensive, it does not addanything to the value of the goods produced. Consequently,incentives to comply with environmental legislation are scarce. 5In fact, complying with legislation is often bad business for acorporation whose main concern is to maintain or make more profitin a competitive economy.While the reasons for corporations to conform withenvironmental legislation are few, there is a definite need tomake corporations comply because they areat once more powerful and more materially endowed and equippedthan are individuals and, if allowed to roam unchecked in thefield of industry and commerce, they are potentially moredangerous and can inflict greater harm upon the public than cantheir weaker competitors. 6Furthermore, achieving an adequate level of corporate compliancewith environmental legislation is not important only because ofcorporations' significant contribution to environmentaldegradation, but also because positive corporate behaviour canresult in a substantial benevolence to the well-being of the5. See generally, Barry Commoner, Can Capitalist BeEnvironmentalist? (1990) 75 Business & Society Review 31.6. R. v. St. Lawrence Corp., [1969] 3 C.C.C. 263 at 281, [1969] 2O.R. 305, 5 D.L.R.(3d) 263, 59 C.P.R. 97, 7 C.R.N.S. 265 (C.A.).4environment. For one thing, due to their ample economicresources, large corporations have generally every possibility toinvest in environmental protection. Secondly, big corporationscarry extensive economic and political powers, and thereforetheir environmental policies can have a significant effect onother companies and consumer behaviour. Furthermore, controllingcorporations has an important moral and normative rational; sincea big part of corporate profit is accumulated as a result ofusing common goods of air, water, and other natural resources,they can be expected to invest some of the profits in protectingthese common goods. Also, controlling corporations represents animportant means to maintain public confidence in the capacity ofthe government to protect public interests. To ignore corporatewrongdoings can create a dangerous impression that people andgroups controlling economic power are beyond the law, as well asset an example of lawlessness for the general public.The ways to encourage compliance are numerous including suchdiverse measures as education, peer pressure, inspections, anduse of sanctions. 7 Seeking compliance with the CanadianEnvironmental Protection Act (CEPA), Environment Canada dividesthese different strategies into two basic categories of promotionand enforcement. 8 Promotion is based on a conciliatory style ofcontrol, and can appear in the form of negotiations, education,or economic incentives. Enforcement is generally connected with"sanctions" and "penalties", although not necessarily solely with7. For a more complete list of measures, see Saxe, supra 2 at 25.8. Canadian Environmental Protection Act, Enforcement andCompliance Policy. (Ottawa: Environment Canada, 1988), at 5.5penal sanctions. Administrative, civil and criminal law allinclude sanctions, the nature of which is very similar, that of"a conditional evil annexed to a law to produce obedience to thatlaw". 9 However, in this thesis, the "conditional evil" is limitedto penal sanctions, the use and application of which to corporateoffenders is the subject matter of this study. While the term"corporate offender" can apply equally to corporations and toindividuals working inside the corporate entity, the focus ofthis thesis is on penalizing the corporate body as an entity. Theuse of penal measures against corporate officers and employeesis, for the most part, excluded from this work.1.2. Corporations in the Penal SpotlightWhile the other compliance strategies are generally acceptedas appropriate measures in encouraging corporate compliance withenvironmental legislation, the use of penal sanctions has raisedplenty of controversy within the legal profession. 10 Both thetheoretical and practical feasibility of holding the corporation,a "nonperson", criminally responsible has been questioned. Some9. Black's Law Dictionary, revised 4th ed., (St. Paul, Minn.:West Publishing Co., 1968), at 1505.10. See e.g., Michele Kuruc, Putting Polluters in Jail: TheImposition of Criminal Sanctions on Corporate Defendants UnderEnvironmental Statutes. (1985) 20 Land and Water Review 93; DavidMarshall, Environmental Protection and the Role of the CivilMoney Penalty: Some Practical and Legal Considerations. (1975) 4Environmental Affairs 323 at 329-30; Brent Fisse, RestructuringCorporate Criminal Law. (1983) 56 Southern California Law Review1141; Developments in the Law - Corporate Crime: RegulatingCorporate Behaviour Through Criminal Sanctions. (1979) 92 HarvardLaw Review 1227 at 1365-75.6of the most popular arguments against penalizing corporations, inaddition to the questions of evidence, include the problems inassigning liability on a "mindless" entity and fashioning anappropriate sentence to a "body" that cannot be imprisoned. Thefact that corporate forms range from multinationals to a singleindividual who has formed a company because of tax advantagesdoes not make the issues any easier. A further serious criticismis the inability of traditional penal sanctions to compensate theharm done to the victim or to repair and clean up the damagedsite. Also, the fines are often regarded as mere "licence fees"to pollute with little real influence on corporate environmentalbehaviour.Although I admit that all these concerns are relevant andgive reason to review further the application of penal measures,I do not believe that penal measures should be completely erasedfrom the list of alternatives in encouraging corporatecompliance. For one thing, penal measures carry a certain moral,condemning stigma missing from alternative tools. They emphasizethe unpleasantness of "being caught". When a penal provision hasbeen attached to a prohibition or a requirement, it is a clearsignal about a certain degree of opprobrium. The possibility ofbecoming labeled "criminal" and being exposed to the public mayoften be enough to deter most potential offenders; particularlyso, when the target group, such as corporations, pays specificattention to their good public image. Also, past experiences inenvironmental law and related areas, such as economic or labourlegislation, demonstrate quite clearly that more than mere7persuasion is needed in order to achieve an adequate level ofcorporate compliance with environmental legislation.Negotiations, education, and other promoting measures certainlyhave an important role to fulfill, but they are not alwaysenough. Economic incentives for non-compliance are often simplytoo great to resist. Hence, "[i]t is folly...to anticipate thatproper standards of environmental responsibility can be securedby doing nothing more than tickling the soft underbelly ofindustry onto compliance. "11Instead of fruitless arguing about the "betterness" ofdifferent compliance strategies, more effort should be made touse all available measures to complement each other, and to solvesome of the problems of the present alternatives. This thesis isan attempt to examine and seek solutions to some of the problemssurrounding the issue of penalizing corporations in environmentalcases, more specifically, the problems of imposing liability on anon-human entity and finding a suitable sanction that takes intoaccount the vast diversity of environmental offences andoffenders. In the study, the comparative method is employed toappraise how two different countries in two different legalsystems - common law Canada and civil law Finland - have11. Donald Avison, "Using the Criminal Courts to RegulatePolluters" in Into the Future: Environmental Law and Policy forthe 1990's. Ed. Donna Tingley (Edmonton: Environmental Law Centre(Alberta) Society, 1990), at 70. See also, Peter Nemetz, FederalEnvironmental Regulation in Canada. (1986) 26 Natural ResourcesJournal 551 at 571, where Nemetz notes that a study undertakenfor the Economic Council of Canada on the use of environmentalregulation shows that "excessive reliance on negotiation forcompliance appears to have compromised the goal of acceptableenvironmental quality."8proceeded to solve the theoretical and practical challenges ofimposing criminal liability on corporations. The researchobjective is to study the role, function, and efficiency ofcriminal corporate liability as a compliance strategy, and findout how well the present Canadian and proposed Finnish law oncorporate criminal liability complies with the aim of increasingcorporate compliance with environmental legislation.1.3. Legislative FrameworkBoth in Canada and Finland, the strong reliance onlegislation in environmental protection is reflected in thecontinuously growing volume of environmental legislation. Thelegislative boom which started in the 1960s has brought about amultitude of environmental statutes which exist mostly in ascattered, dispersed form. In Canada, the diversity oflegislation is emphasized by the fact that the Constitution Actdivides the legislative powers in environmental matters betweenthe federal and provincial governments. 12 Some of the mostimportant federal environmental statutes include the CanadianEnvironmental Protection Act (CEPA), 13 the Fisheries Act, 14 theNorthern Inlands Waters Act, 15 and the Transportation ofDangerous Goods Act. 16 Also the Criminal Code includes sections12. The Constitution Act 1867 (U.K.), 30-31, Vict. c.3 (formerlyBritish North America Act 1867), ss. 91-92.13. S.C. 1988, c. 22.14. R.S.C. 1985, c. F-14.15. R.S.C. 1985, c. N-25.16. R.S.C. 1985, c. T-19.9which can be used against polluters such as section 219 oncriminal negligence or section 180 on common nuisance. 17 The LawReform Commission has also proposed that a new crime against theenvironment should be included in the COde. 18 Provincial legislationdeals with such issues as waste management, public health, andecological reserves. 19In Finland, environmental control is governed by a similarlydiverse and complex maze of legislation ranging from the FinnishPenal Code (39/1889) to the Private Roads Act (358/62). Some ofthe most important laws include the Air Protection Act (67/82),the Waste Management Act (673/78), the Waters Act (264/61), theConservation Act (71/23), and the Noise Abatement Act (382/87).Provisions regarding the protection of the environment can alsobe found in such widely diverse laws as the Planning andConstruction Act (370/58), the Mining Act (503/65), and theRecreation Act (606/73). As in Canada, a proposal has been madeabout concentrating environmental offences under a new"Environmental Offences" chapter to the revised Penal Code. 2°In both countries, environmental statutes usually containprovisions that create offences for breach of specific17. R.S.C. 1985, c. C-46. The Code is, however, only seldom usedagainst polluters. See, Law Reform Commission of Canada, CrimesAgainst the Environment. Working Paper 44 (Ottawa: LRCC, 1985),at 49-59.18. Law Reform Commission of Canada, Recodifying Criminal Code.Report 31 (Ottawa: LRCC, 1987), at 93-97.19. For more information on constitutional constraints, see 1Robert T. Franson - Alastair R. Lucas, Canadian EnvironmentalLaw. (Toronto: Butterworths, 1976).20. Rikoslain kokonaisuudistus II. Rikoslakiprojektin ehdotus.Oikeusministeritin lainvalmisteluosaston julkaisu 1/1989. ("TotalReform of the Penal Code II", publication 1/1989 of theLegislative Department of the Ministry of Justice.)1 0prohibitions or requirements. A common type of statute is onethat establishes a regulatory scheme under which failure tocomply with any requirements contained in the act or regulationsis made an offence. Another type of statutes is based on acentral prohibition or series of prohibitions of environmentallydamaging actions. Almost all of these statutes contain a penalprovision in which violations of the statute are penalized. 21 Themost common penalty is a fine. In Canada, the fines provided canbe quite substantial with the maximum penalties of six or evenseven figures. 22 In Finland, environmental statutes generally seta penalty of a day-fine or six months in prison. 2321. It is important to notice that the terms "penalizing" and"penal sanctions" are generally used to imply the provincialpower to enforce their laws by imposing penal sanctions, whilethe use of terms "criminal penalties" and "crimes" is restrictedto federal criminal laws and penalties under s. 91 of theConstitution Act, and only the federal government has theauthority to enact such laws in Canada. However, for the sake ofconvenience, in this work, the term "penalize" covers as well theCanadian federal and provincial offences as the relevant sectionsof the Criminal Code, and the Finnish environmental offencesfound in environmental statutes or in the Finnish Penal Code.22. For example, under the CEPA, polluters are liable to maximumfines of $1 million. A million dollar maximum fine can be foundalso in the federal Oil and Gas Production and Conservation Act,R.S.C. 1985, c. 0-7. Another federal statute, the Fisheries Act,provides for fines of $100,000 a day. On the provincial level,the Ontario Environmental Protection Act, R.S.O. 1980, c. 141,provides for fines up to $100,000 for repeat offences, and theManitoba Environment Act, S.M. 1987, c. 26, has a special$200,000 fine reserved for repeat offences committed bycorporations while a corresponding fine for an individual is only$10,000.23. Some penal provisions provide for more stringent penalties.For instance, the penalty for aggravated violation of the WasteManagement Act is six years in prison. However, in legal practicethe use of imprisonment in environmental cases has been a rareexception and if imposed, it has almost always been a suspendedsentence.11The approach to the idea of imposing criminal liability oncorporate bodies has traditionally been very different in thesetwo countries. In common law systems, corporate criminalliability has been an accepted principle for more than onehundred years. Although the roots of the concept are in England,the Canadian courts soon established their own approach to thenotion, and today there is a significant body of Canadian law oncorporate criminal liability. In Finland and other civil lawcountries, the approach to the idea of imposing criminalliability on corporations has been more cautious. Since acorporation has no mind to entertain guilt and no body to act inpropria persona, punishing such a body has been consideredagainst all fundamental principles of criminal law. Accordingly,sentencing a corporation has not been possible under the Finnishlegislation. However, even fundamental principles of criminal lawcannot resist the change of times. Legal history was made inFinland in 1987 when the Criminal Law Project Task Forcepublished its proposal on "The Criminal Liability of CorporateBodies" . 24 This proposal and its later versions together with theCanadian experience on the application of corporate criminalliability to environmental offences form the sources for thisstudy.24. OikeushenkilOn rangaistusvastuu. Rikoslakiprojektin ehdotus.Oikeusministeritin lainvalmisteluosaston julkaisu 13/1987 ("Thecriminal liability of corporate bodies", publication 13/1987 ofthe Legislative Department of the Ministry of Justice), and itslater version in Oikeushenkilan rangaistusvastuu.Laintarkastuskunnan lausunto 3/1990. (Publication 3/1990 of theCommission for the Examination of Legislation.)121.4. What Are Good Laws Made of?As with any law, the law on corporate criminal liability hasdeveloped to deal with problems that are threatening socialorder. With corporate criminal liability, the threat is non-complying corporations - more specifically, with regard to thetopic of this paper, corporate non-compliance with environmentallegislation. Also, as with any law, in order to performefficiently, the law on corporate criminal liability must fulfillcertain criteria or purposes. According to Harold Berman andWirlliam Greiner, these criteria are founded on the socialfunctions of law. 25 To Berman and Greiner, legal order means away to hold a society together, and every law, as a part of thislegal order, is supposed to contribute to this goal of socialorder through three social functions: firstly, by restoringequilibrium to the social order when that equilibrium has beendisturbed; secondly, by maintaining predictability and enablingmembers of society to calculate the consequences of theirconduct; and thirdly, by molding the moral and legal conceptionsand attitudes of a society. In order to work efficiently towardssolving the problem that is causing social disorder, the lawshould function in all three ways.In this thesis, the social functions of law are used as a"measuring stick" against which the Canadian experience andFinnish law proposal on corporate criminal liability are25. Harold Berman - William Greiner, The Nature and Functions ofLaw. 3rd ed. (Mineola, N.Y.: The Foundation Press, 1972), at 25-37.13evaluated. Using this "measuring stick" as my guiding principle,I attempt to reveal strengths and weaknesses of the twoapproaches and then, on the basis of this evaluation, seek toconstrue a framework for an efficiently working system ofcorporate criminal liability.1.5. The Plan of the ThesisChapter two of this thesis is devoted to the Canadianexperience on corporate criminal liability. In addition tosurveying the Canadian system, the purpose of the chapter is tofamiliarize the reader with the concept of corporate liability,and bring out some of the problems surrounding its application.The chapter starts with the theoretical framework which is thenfollowed by the study on the sentencing practices. The emphasislies on the legal practice and legislative developments of the1980s although some older material is used where appropriate.With statutory material, I have concentrated the research onfederal statutes and on the environmental legislation of Ontarioand British Columbia. Some recent and relatively advancedstatutes of other provinces, such as the Manitoba Environment Actfrom 1987, are referred to when relevant.Chapter three discusses the Finnish law proposal. Thepurpose of the chapter is to introduce a different way ofapplying criminal liability to corporations. The Finnish proposalis then, together with Canadian experience, evaluated in light ofthe social functions of law in chapter four. Finally, in chapter14five, using the information revealed in previous chapters, Iattempt to determine some of the elements of an efficientlyworking system of penalizing non-complying corporations inenvironmental cases, and make some suggestions for theimprovement of the law.Since the material used in this thesis consists of the law(or proposed law) in two different countries with different legalsystems, a word of warning is necessary; due to differences inlegal structures and concepts, one should be wary about comparingthe two approaches directly. Direct transplants from one systemto another rarely work because of different cultural, economic,and legal backgrounds. With this in mind, I do not attempt tofind the "one and only" ideal solution. Instead, my research isbased on pursuing some essential elements that should be part ofan efficiently working corporate criminal liability. Obviously,every jurisdiction has to mold and adjust these elements to fitits own legal traditions. Yet, I have not wanted the differencesto stop me from comparing these two systems, and I hope that thiswork fulfills the function Sir Henry Maine gave to comparativelaw when he noted that "if not the only function, the chieffunction of comparative jurisprudence is to facilitatelegislation and the practical improvement of law. "2626. H.C. Gutteridge, Comparative Law, An Introduction to theComparative Method of Legal Study and Research. 2nd. ed.(Cambridge: University Press, 1949), at 3.152. THE CANADIAN EXPERIENCEThis chapter consists of two parts; the first part isdevoted to discussing the theoretical framework around corporatecriminal liability while the second part deals with corporatesentencing. Theories of liability and their application toenvironmental offences, limitations of corporate liability,interrelationship between corporate and individual liability, andthe entities liable are discussed under the theoreticalframework. Under the section on corporate sentencing, thetheories of sentencing are introduced together with sentencingcriteria and sentencing options.The primary sources are environmental cases, particularlythose of the 1980s, and environmental statutes. The Criminal Codeprovisions are referred to where applicable to environmentaloffences. When legal precedents in the area of environmental laware not available, I have resorted to comparable cases ofcorporate offences, such as trade and tax offences.2.1. Theoretical Framework2.1.1. Theories of LiabilityUnder the old common law, the general principle was thatcorporations were not criminally liable. This was based on thenotion that corporations can neither think nor act by themselves,thus having "no soul to damn and no body to kick". 27 Furthermore,27. The statement is attributed to Lord Thurlow and has sincebeen cited by several authors, e.g. Glanville Williams, CriminalLaw: The General Part. 2nd ed. (London: Stevens & Sons, 1961), at16there was no adequate system of procedure which could have made acorporation appear and answer for its alleged crimes. 28 However,social and economic changes in society over the last one hundredyears have encouraged the legal profession to find the soul andthe body in the corporate entity. The development towards fullcorporate criminal liability has taken place along twotheoretical lines, those of vicarious liability andidentification doctrine. Vicarious liabilityThe development of corporate criminal liability started inEngland through so called vicarious liability. Since acorporation was regarded as an artificial entity with no mind toentertain guilt and no body to act in propria persona but onlythrough its servants and agents, corporate liability hadnecessarily to be vicarious liability. That is, liability for theacts and the state of mind of another usually_due to some priorrelationship between the two; with corporations, this generallymeant the relationship between the corporate employer andemployees. 29The concept of vicarious liability first developed in theEnglish law of torts, where a master was held liable for the acts856, and John Coffee, "No Soul to Damn; No Body to Kick": AnUnscandalized Inquiry into the Problem of Corporate Punishment.(1981) 79 Michigan Law Review 386.28. L.H. Leigh, The Criminal Liability of Corporations in EnglishLaw. (London: Lowe & Brydone (Printers) Ltd., 1969), at 3. Seealso, L.H. Leigh, The Criminal Liability of Corporations andOther Groups. (1977) 9 Ottawa Law Review 247 at 247-49.29. Leigh 1969, ibid. at 15-24.17of his servant when the acts in question created a publicnuisance or were criminally libelous. At first, a corporation washeld liable only when it breached a duty by an act of omission(so called nonfeasance). By the middle of the 19th century,corporate liability had extended to misfeasance, that isbreaching a duty by committing a wrongful act." Accordingly, thenumber of corporate prosecutions started to grow, and by the endof the 19th century, corporations were charged under common lawoffences of public nuisance and statutory public welfare offencescreated in such statutes as the Factories Act or the PublicHealth Act. 31 In 1900, the Supreme Court of Canada summed up thestate of law as follows:it is manifest that a corporation can render itself amenable tothe criminal law for acts resulting in damage to numbers ofpeople, or which are invasions of the rights or privileges of thepublic at large, or detrimental to the general wellbeing orinterests of the State. 32In spite of these early developments, the fundamentalprinciple that "a man is criminally liable for his own acts andfor them alone" prevailed, and vicarious liability could not beapplied to "real crimes". 33 Consequently, by the 1920s, there wasstill no theoretical basis for holding corporations liable for30. Whitfield, Molineux and Whitfield v. South Eastern Ry. Co.(1858), 120 E.R. 451; R. v. Stephens (1866), L.R. 1 Q.B. 702; R.v. Holbrook (1878), 4 Q.B.D. 42; R. v. Birmingham and GloucesterRy. Co. (1842), 114 E.R. 492; R. v. Great North of England Ry.Co. (1846), 115 E.R. 1294. See, Michael W. Caroline, CorporateCriminality and the Courts: Where Are They Going? (1984) 27Criminal Law Quarterly 237 at 240-42.31. Leigh 1969, supra 28 at 22.32. The Union Colliery Co. v. The Queen (1900), 4 C.C.C. 400 at404, quoted in Caroline, supra 31 at 241.33. C.R.N. Winn, The Criminal Responsibility of Corporations.(1929) 3 Cambridge Law Journal 398.18serious crime. This led to an irrational result; corporationswere immune from criminal liability at a time when thecorporation had become the principal tool for commercial activityin society.In order to hold corporations responsible for criminaloffences, the courts had two approaches they could use; theycould either extend vicarious liability to cover serious crimesby deciding that the rules applying to corporations differed fromthose applying to natural employers, or that the acts of someindividuals inside the corporation could be attributed to thecompany as its own. 34 While American federal courts have extendedvicarious liability and assimilated it with corporateresponsibility, 35 the Canadian courts have generally favoured thesecond alternative of identification doctrine. 362.1.1.2. Identification doctrineThe identification doctrine is based on identifying certainpeople within the company with the corporate entity andattributing their acts and omissions to the corporation.34. Leigh 1977, supra 28 at 247-48.35. Ibid. at 266-72. The leading case is considered to be Egan v.U.S. (1943), 137 F.2d 369^(8th Cir. C.A.). The decision wasreaffirmed in U.S. v. Basic Construction. (1983), 711 F.2d 570(5th Cir. C.A.). See also, Kathleen Brickey, Corporate CriminalAccountability: A Brief History and Observation. (1982) 60Washington University Law Quarterly 393; Kip Schleger, JustDeserts for Corporate Criminals. (Boston: Northeastern UniversityPress, 1990), at 5-7.36. E.g. R. v. St. Lawrence Corp., supra 6 at 281; CanadianDredge & Dock Co. v. The Queen (1985), 19 C.C.C.(3d) 1 at 22,[1985) 1 S.C.R. 662, 45 C.R.(3d) 289. See generally, Don Hanna,Corporate Criminal Liability. (1989) 31 Criminal Law Quarterly452.19Although the identification doctrine can be traced as farback as the 1923 decision of R. v. Canadian Allis-ChalmersLtd., 37 the basis and fundamental principles of the doctrine werelaid twenty years later in R. v. Fane Robinson Limited. 38 In thedecision, Justice Ford adopted the reasoning of the House ofLords in Lennard's Carrying Company v. Asiatic Petroleum Co., inwhich Viscount Haldane noted that "a corporation is anabstraction. It has no mind of its own any more than it has abody of its own," and called for "somebody who...is really thedirecting mind and will of the corporation, the very ego andcentre of the personality of the corporation". 39The doctrine has been restated and justified in severallater cases. Its application to environmental offences will belooked at next.2.1.2. Applying Corporate Criminal Liability toEnvironmental Cases: The Division of OffencesThe rise of industrialism in the nineteenth century led tothe development of a society that was economically and socially alot more diverse than its predecessors. Technology and the urbanenvironment caused threats to the public welfare; accidents inthe workplace, unhealthy dwellings, and poor sanitary systemswere all by-products of the industrial revolution. Traditionalcriminal law with its mens rea requirement was unable to deal37. 54 O.L.R. 38, 48 C.C.C. 63 (C.A.).38. [1941] 2 W.W.R. 235, [1941] 3 D.L.R. 409 (Alta C.A.).39. [1915] A.C. 705 at 713, [1914-1915] All E.R. Rep. 280 at 283(H.L.).20with these modern hazards. That is when a new category ofoffences called public welfare offences saw daylight; therequirement of mens rea was suspended and replaced with absoluteliability, and by the end of the nineteenth century it wasjudicially recognized that in public welfare offences, mere proofof the actus reus was enough to lead to conviction."This division of offences to mens rea and absolute liabilityoffences led to a situation in which the justice system was facedwith two extremes: absolute liability with its wide scope butquestionable fairness at the one end, and "true crimes" withenforcement problems at the other. It took until 1978 to find asolution to this problem of extremes; R. v. City of Sault Ste.Marie created a half-way house between the two categories bydividing offences into three groups. 41 According to the decision,these three groups are:1) Offences in which the prosecution must prove mens rea, orguilty mind. Most mens rea crimes can be found in the CriminalCode. 42 The Code provisions applicable to environmental offencesinclude at least criminal negligence (s. 202), common nuisance(s. 176), and mischief (s. 387). 43 However, in practice, CriminalCode offences are seldom used as the basis for environmentalprosecutions. It has been argued that the present Code provisionsdo not adequately address serious environmental offences and40. For more information about the birth of regulatory offences,see Ingebor Paulus, Strict Liability: Its Place in Public WelfareOffences. (1978) 20 Criminal Law Quarterly 445.41. 40 C.C.C.(2d) 353, [1978] 2 S.C.R. 1299, 3 C.R.(3d) 30.42. Supra 17 as am.43. For more detailed coverage, see Crimes Against theEnvironment, supra 17 at 49-59.21consequently, a separate and newly formulated Code crime aboutenvironmental offences has been suggested. 44Mens rea offences also include statutory offences using suchwords as "willfully", "intentionally", or "knowingly". Forexample, sections 114 and 115 in the CEPA provide forenvironmental mens rea offences. Section 114 penalizes providingfalse or misleading information concerning a toxic substance, andsection 115 provides for intentionally or recklessly causingenvironmental disaster or danger to others. An example of aprovincial mens rea offence can be found in section 145 of theOntario Environmental Protection Act, which penalizes knowinglyproviding false information to the Minister of the Environment. 452) Strict liability offences which do not require proof ofmens rea. All the prosecution has to prove is the prohibited act,the actus reus. However, the accused avoids liability if he canestablish a defence of due diligence - that he "reasonablybelieved in a set of facts which, if true, would render the actor omission innocent, or if he took all reasonable steps to avoidthe particular event" . 46 According to Sault Ste. Marie, unless apollution statute expressly includes or excludes both mens reaand negligence, the offence is likely to be regarded as one ofstrict liability. 47 Accordingly, the vast majority ofenvironmental offences fall into this category.44. Ibid.45. Supra 22. See also, R. v. Mac's Liquid Disposal (1982) Ltd.(1987), 2 C.E.L.R. (N.S.) 89 (Ont. C.A.).46. R. v. Sault Ste. Marie, supra 41 at 374.47. Ibid.223) Offences of absolute liability require only proof of theprohibited act, actus reus, and allow no defence of duediligence. Most environmental offences belonging to this categorycan be found in municipal by-laws.The liability of a corporation is different depending on thecategory the offence belongs to. Conditions for corporatecriminal liability were remarkably clarified by the Supreme Courtof Canada in the Canadian Dredge and Dock Co. v. The Queen in1985 on which the following presentation is primarily based. 48According to the decision, the basic difference between mens reaand other kinds of offences is that in the former, liability isbased on the conduct of the company's directing mind, while inabsolute and strict liability offences liability is based on theacts and omissions of servants and agents of the corporation. Inpractice, this means that in mens rea offences, the number ofpeople whose conduct invoke corporate liability is very limited,while in absolute and strict liability offences, acts andomissions of anyone in the corporation can be imputed to thecorporation. 49 This and other criterion for corporate criminalliability will be discussed next.48. Supra 36. The decision also significantly clarified thedistinction between vicarious liability and identificationtheory.49. See generally, Saxe, supra 2 at 99- Conditions for Corporate Criminal Liability2.1.3.1. Whose conduct invokes corporate liability? A) In absolute and strict liability offences With absolute and strict liability offences the answer iseasy enough; since there is no mental element (except whenestablishing the defence of due diligence), corporate liabilityarises automatically and directly from the fact that as a resultof an act or an omission of any servant or agent of thecorporation, a violation of an environmental statute has takenplace. It must be emphasized that the liability is primaryliability, not vicarious liability. In vicarious liability aperson is liable for the guilty mind of others while in strictliability offences the question of fault is irrelevant except forthe establishment of due diligence. Hence, under the Canadiantheory, the corporation is not held liable for the acts ofsomeone else, but for its own acts. Liability arises from thefact that a corporation cannot act on its own but only throughits servants and agents; their acts and omissions are the acts ofthe corporation. 5° Therefore, although the identificationdoctrine is generally connected only to "real crimes", primaryliability comes very close to the same idea by identifying actsand omissions of servants and agents with those of thecorporation.50. Canadian Dredge & Dock, supra 36 at 8-9.24The identification between the corporation and its servantsand agents has been codified into several environmental statutes.A typical provision states thatit is sufficient proof of the offence that it was committed by anemployee or agent of the accused...unless the accused establishesthat the offence was committed without his knowledge or that heexercised all due diligence to prevent its commission. 51In practice, in cases of strict and absolute liabilityoffences, statutory provisions do no more than codify principlesset in the common law. However, with mens rea offences thesituation is different; according to Canadian Dredge & Dock, therequired guilty mind has to be present in the directing minds ofthe corporation. Consequently, to convict a corporation on thebasis of an act or omission of someone who is not a directingmind would conflict with the decision and would probably be held. unconstitutional. 52 Section 124(1) of the CEPA which providesthat "it is sufficient proof of the offence that it was committedby an employee or agent" appears to raise the possibility forsuch a conflict; the CEPA includes both strict liability and mensrea offences, and since section 124(1) provides for "anyprosecution for an offence under this Act", it is obviously meantto cover both categories of offences.The identification doctrine is also relevant whenestablishing the defence of due diligence in strict liabilityoffences. The question of whose due diligence is required was51. B.C. Waste Management Act, S.B.C. 1982, c. 41, s. 34(11) (am.by 1987, c. 51, s. 14(c)). For a list of statutes containingsimilar provisions see Saxe, supra 2 at 100n.52. Saxe, ibid.25answered by Justice Dickson in Sault Ste. Marie when he ruledthat[t]he due diligence which must be established is that of theaccused alone. Where an employer is charged in respect of an actcommitted by an employee acting in the course of employment, thequestion will be whether the act took place without the accused'sdirection or approval, thus negating wilful involvement of theaccused, and whether the accused exercised all reasonable care byestablishing a proper system to prevent commission of the offenceand by taking reasonable steps to ensure the effective operationof the system. The availability of the defence to a corporationwill depend on whether such due diligence was taken by those who are directing mind and will of the corporation, whose acts aretherefore in law the acts of the corporation itself (emphasisadded). 53Thus, the acts and omissions of any corporate servant invokecorporate liability unless the corporation establishes a defenceof due diligence by showing that the directing minds eitherreasonably believed in a mistaken set of facts that, if true,would render the act or omission innocent, or had takenreasonable care to prevent the offence. 54B) In mens rea offences As mentioned above, with mens rea offences the mentalelement must also be taken into consideration. Unlike the actsand omissions, the mental state of a servant or agent is notattributed to the corporation unless the individual representsthe directing mind and will of the corporation. In other words,the mens rea must be present in the directing mind.The identification doctrine raises a further question aboutthe identity of the directing mind and will. Who can be regarded53. Supra 41 at 377-78.54. See Saxe, supra 2 at 145-90.26as the directing mind and will? How low on the corporate laddercan the identification doctrine reach? A closely related problemis whether to look at the formal standing of an individual agentor regard his actual powers and position within the corporation.The following classic statement given by Justice Schroeder in R.v. St. Lawrence Corp. forms a basis for answering thesequestions:if the agent falls within a category which entitles the Court tohold that he is a vital organ of the body corporate and virtuallyits directing mind and will in the sphere of duty andresponsibility assigned to him so that his action and intent arethe very action and intent of the company itself, then his conductis sufficient to render the company indictable by reasonthereof. 55In legal practice, a director or a senior executive officeris usually regarded as the directing mind and will of thecorporation. However, the "vital organ" does not always have tobelong to the senior management; for example, in Canadian Dredge& Dock, the board of directors, the managing director, thesuperintendent, the manager or anyone else to whom the board of directors had delegated the governing executive authority wereregarded as possible directing minds. 56 Also, the words "in thesphere of duty and responsibility assigned to him" in the abovequotation from St. Lawrence Corp. seem to suggest that the dutiesof a directing mind can be delegated.In some cases, the delegation has reached quite far down onthe corporate ladder; for instance, in Karen Reese v. LondonRealities & Rentals, the only employee of a realty company who55. Supra 6 at 281.56. Supra 36 at 23.27was responsible for renting properties was held to be a directingmind. 57 Similarly, in R. v. Waterloo Mercury Sales Ltd., a used-car sales manager who was not a director or officer of thecompany and who violated orders of senior officials was regardedas a directing mind of the corporation. 58 Residing directing mindin fairly low-level officials has been defended by referring tothe general corporate organizational structure in Canada; thesize of the country necessitates that corporate operations areoften very widespread. Consequently, a corporation can haveseveral directing minds with delegated duties in differentgeographical locations. 59An interesting situation connected to the issue ofdelegation is created when a corporation has engaged anindividual contractor to conclude a part of a project, and thecontractor commits an offence while operating under the contract.Such a situation took place in R. v. Placer Developments Ltd.when the conduct of an individual contractor directly led to aspill. Placer was found responsible for the offence because thecontract between the two parties empowered Placer to superviseand influence the offending conduct. It was pointed out in thejudgement that "[t]hey [Placer] had the opportunity and expertiseto exercise their responsibilities and failed to do so." 6057. (1986) 7 C.H.R.R. D3587 (Ont.Bd. of Enquiry).58. (1974), 18 C.C.C.(2d) 248, [1974] 4 W.W.R. 516, 27 C.R.N.S.55 (Alta Dist.Ct.).59. Hanna, supra 36 at 463-66. Contrary to the Canadian law, inEngland only the acts of superior officers can be identified withthe corporation. See Tesco Supermarket v. Nattrass, [1972] A.C.153, [1971] 2 All E.R. 127 (H.L.).60. (1983), 13 C.E.L.R. 42 at 42.28Similarly, in the ruling Aurora Quarrying Limited v. Catherwood,the court noted that "a corporation cannot escape convictionmerely by saying its mind and will were delegated to another, anindependent contractor." 61Another problematic issue is whether to look at the formalor actual position of a corporate officer. In Canadian Dredge &Dock, Justice Estey noted that an individual must "represent thede facto directing mind, will, center, brain area or ego" of thecorporation. 62 Hence, it is evident that the Canadian courtsemphasize function rather than form. The question does not seemto be so much what is the title of the officer but whether heexercises substantially autonomous powers in respect to relevantcorporate activities. 63 This interpretation is evidentlysupported when an apparently low-level official is regarded as adirecting mind; if an employee has been delegated substantialdiscretion to decide how to carry out duties, she may well becomethe directing mind within the scope of those duties.The proposed new Criminal Code seeks to clarify the pictureof the directing mind by articulating the criteria for corporatecriminal liability. Since the proposed Criminal Code would applyto all crimes, including those outside the Code, that arepunishable by a term of imprisonment, the proposed provisionswould be a significant clarification of the present situation.According to the proposed section 2(5)(a),522.61. [1982] 6 W.W.R.^517 at62. Supra 36.63. Leigh 1977, supra 28 at 255.29a corporation is liable for conduct committed on its behalf by itsdirectors, officers or employees acting within the scope of theirauthority and identifiable as persons with authority over theformulation or implementation of corporate policy. p '*The common law principles, discussed above, are retained andclarified in the proposal. Specific reference to employeesreflects the expanded interpretation of the identificationdoctrine, and including formulation and implementation ofcorporate policy demonstrates that the emphasis is on thefunction rather than on the form.C) Question of identificationA further important question is whether, in order to convicta corporation, there must be an identifiably guilty person withwhom the corporation can be identified. The issue was discussedin R. v. Dawson City Hotels Ltd. which ruled that finding thedirecting mind guilty is a condition precedent for finding thecorporation criminally liable in offences that require a guiltymind." In absolute and strict liability offences, theelimination of fault makes the situation quite different; sincethere is no need to find a guilty mind, there is obviously noneed to find a specific person behind the conduct. Hannaillustrates the present practice with R. v. Pierce FisheriesLtd., a case in which the corporation was charged underregulations made pursuant to the federal Fisheries Act forpossession of undersized lobsters." He notes that64. Recodifying Criminal Code, supra 18 at 26.65. (1986), 1 Y.R. 3 (Y.T.C.A.). See also, R. v. Fell, [1982] 34O.R.(2d) 665, 131 D.L.R.(3d) 105, 64 C.C.C.(2d) 456.66. [1971] S.C.R. 5, [1970] 5 C.C.C. 193, 12 C.R.N.S. 272.30[t]he conclusion that the acts of employees counted as corporateacts was so obvious that it was never explicitly discussed, yetthe point remains that some sort of identification theory wasbeing relied upon to impute the acts of humans to thecorporation. 67Hence, not only the requirement of finding a guilty individual iseliminated from strict liability offences, but it seems thatthere is no need to identify anyone at all; as long as it isevident that someone within the corporation must have committedthe act, the corporation can be made liable. With regard to thedefence of due diligence, the onus of proof is on the offender.Hence, it is the corporation's duty to identify the directingmind(s).Several environmental statutes contain a specific provisionin which the question of identification is settled. For example,according to section 78.3 of the federal Fisheries Act,identification or prosecution of an employee or agent is not aprerequisite for corporate liability. 68 Also the proposed newCode deals with the question of identification. The proposedsection 2(5)(b) provides that[w]ith respect to crimes requiring negligence, a corporation isliable...notwithstanding that no director, officer or employee maybe held individually liable for the same offence. 69The Law Reform Commission justifies its proposal by noting thatthe harm is often the result of negligence in the organizationalprocess rather than in the conduct of a single individual. TheCommission talks about "collective participation" in which "no67. Supra 36 at 460.68. Supra 14 (as am S.C. 1991, c. 1, s. 24). See also CEPA, supra13, s. 124(1); B.C. Waste Management Act, supra 51, s. 34(11) (asam. 1987, c. 41, s. 14(c)).69. Recodifying Criminal Code, supra 18 at 26.31one...may individually have had the requisite culpability."" Itis important to notice that the provision does not cover offencesof intent or recklessness, but only those of negligence. What kind of conduct is attributable to the corporation? It is obvious that not all kinds of conduct invoke corporateliability; a corporate senior executive cheating on corporatetaxes and transferring the profit into his own pocket is hardlyacting for the benefit of the company. Similarly, a corporatedirector with kleptomaniac tendencies who shoplifts during hislunch hour is obviously not committing the crime as a corporatedirector but as a private individual. Attributing his act to thecorporation would be irrational. In order to be able to attributethe conduct to the corporation, the act or omission mustapparently be something quite different.The question about the proper scope of corporate liabilitywas extensively discussed in Canadian Dredge & Dock. According tothe decision, in order to attribute the conduct of an directingmind to the corporation, the Crown must show the existence of thefollowing elements:1) the action taken by the directing mind was within the field of operation assigned to him,2) the conduct was not totally in fraud of the corporation, and70. Ibid.323) the conduct was by design or result at least partly for thebenefit of the corporation. 71The first element denotes that the identity of the directingmind and the corporation coincide as long as the actions of thedirecting mind are within the sector of operation assigned to himby the corporation. In other words, the act or omission inquestion must be done by the directing force of the company whencarrying out his assigned function in the corporation. 72 In R. v.St. Lawrence Corp., a similar requirement was expressed asfollows:both on principle and authority this proposition is subject to theprovisio that in performing the acts in question the agent wasacting within the scope of his authority either express orimplied. 73Some courts have also talked about "the scope of employment", butJustice Estey explicitly rejects the terminology on the basisthat "it smacks of vicarious liability". 74 Also, the proposed newCode prefers the phraseology "acting within the scope of theirauthority". 75The second, "fraud" element denotes that unless the conductis totally in fraud with the corporation, the corporation isresponsible. Justice Estey underlined the word "totally", thusindicating that partial conflict is not enough to free thecorporation from liability. He drew the outer limit for corporateliability to the point where the directing mind "ceases71. Supra 36 at 38. The test was applied in Dixon v. DeaconMorgan McEwen Easson (1990), 70 D.L.R.(4th) 609 (B.C.S.C.).72. Ibid. at 17.73. Supra 6 at 281.74. Canadian Dredge & Dock, supra 36 at 17.75. Recodifying Criminal Code, supra 18 at 26.33completely to act, in fact or in substance, in the interest ofthe corporation". This kind of a situation is created whenall of the activities of the directing mind are directed againstthe interests of the corporation with a view to damaging thatcorporation, whether or not the result is beneficial economicallyto the directing mind... 76A person acting in fraud with the corporation is not, while doingso, the directing mind because his entire energies are directedtowards destroying the corporation; he turns from the directingmind to the "arch-enemy" of the corporation, and consequently thedoctrine of identification ceases to operate. 77A different interpretation was applied in an earlier case ofR. v. McNamara (No 1) which ruled that there should be corporateliability even for the deceptive activity of corporate officersbecause it "stimulates shareholders to exercise strictersupervision and control in the selection of its directors andcompels directors to be alert to the corporate practises of itssenior personnel". 78The final requirement is that the conduct must by design orresult be at least partly beneficial to the corporation. If theconduct is some kind of "share the wealth" project in which allthe concerned benefit, the corporation cannot avoid liabilityeven if its share is small compared to that of the otherparties. 79 However, if the disparity is significant and thebenefit to the corporation is a necessary by-product of the76. Canadian Dredge &77. Ibid. at 33, 42.78. (1981), 56 C.C.C.79. Canadian Dredge &Dock, supra 36 at 37.(2d) 193 at 315 (Ont.C.A.).Dock, supra 36 at 39.34conduct, it would appear logical that the corporation is not heldresponsible in such a case.The discussion above is limited to mens rea offences.However, it seems appropriate to set limits to the corporateliability also in absolute and strict liability cases. Hannasuggests that the identification doctrine requires that theemployee's act must be related to the scope of his employment,since "otherwise corporations would be liable for offencescompletely unrelated to their enterprise"." A statement byJustice Dickson in Sault Ste. Marie seems to support Hanna'ssuggestion. Justice Dickson was commenting on the defence of duediligence when he stated that[t]he due diligence which must be established is that of theaccused alone. Where an employer is charged in respect of an actcommitted by an employee acting in the course of employment, thequestion will be whether the act took place without the accused'sdirection or approval...(emphasis added). 81With strict liability offences, the question of the natureof due diligence is of great importance because by establishingdue diligence the corporation can free itself from liability.Defining what constitutes due diligence is impossible withoutknowing the circumstances of each particular case. The rules of"reasonable care" and "mistaken set of facts" are too general togive any precise information about the nature of due diligence.Some kind of a general standard for a responsible and efficientlyrun corporation is that it should be able to have an adequatesystem to ensure that corporate servants and agents are80. Supra 36 at 460.81. Supra 41 at 377.35sufficiently trained and instructed to take appropriate measuresto ensure that offences will not be committed. 82A related question is whether conduct carried out contraryto express instructions creates corporate liability. JusticeEstey makes a distinction between mens rea and absolute andstrict liability offences. According to him, in absolute andstrict liability offences a corporation might absolve itself fromliability by adopting and communicating to its staff a generalinstruction in which the illegal conduct is forbidden andconformity with the law is directed. However, in mens reaoffences, general or specific instructions are irrelevant to theliability. Because the corporation and its directing minds areone, the prohibition directed by the corporation to others has noeffect on the determination of criminal liability of thecorporation. 832.1.4. Corporate Liability vs. Individual LiabilityIn common law, criminal corporate liability is cumulativerather than substitutionary. 84 Thus, corporate guilt in no wayeliminates the personal guilt of the natural person to whom the82. For more information, see Saxe, supra 2 at 145-90. See also,Ronald J. Rolls, "Due Diligence Defence" in EnvironmentalEnforcement. Proceedings of the National Conference onEnforcement of Environmental Law. Ed. Linda Duncan (Alberta:Environmental Law Centre (Alberta) Society, 1985), at 67.83. Canadian Dredge & Dock, supra 36 at 27. See also, R. v.Waterloo Mercury Sales Ltd., supra 58, a case in which thepresident of the company had circulated written instructions toprohibit the conduct in question. This was not considered adefence against the acts of the sales manager, who was regardedas a directing mind of the company.84. Leigh 1977, supra 28 at 275.36offence may be attributed; he remains liable throughout.According to Glanville Williams[t]he device of incorporation does not protect people who commitoffences. A company can act only through human beings, and a humanbeing who commits an offence on account of or for the benefit of acompany will be responsible for that offence himself, just as anyemployee committing an offence for a human employer is liable. 85The principle of cumulative liability has been widelyacknowledged both in case law" and in environmental statutes 87 .Nevertheless, prosecution of corporate directors and officers hasbeen rare. 88 However, some dual convictions in the end of the1980s seem to indicate that prosecutors are increasingly seekingto prosecute both the corporation and its officials." The moststriking example of dual liability took place in MetropolitanToronto (Municipality) v. Siapas in 1988. In this Ontariodecision, the corporate president was sentenced to six months injail and a fine of one hundred thousand dollars was imposed onthe corporation for contempt of court for not complying with acourt order forbidding further pollution."85. Textbook of Criminal Law. (London: Stevens & Sons, 1978), at946-47.86. R. v. Hendrie (1905), 11 O.L.R. 202, 10 C.C.C. 298 (C.A.); R.v. Continental Cablevision Inc. (1974), 18 C.P.R. (2d) 209(Ont.Prov.Ct.); R. v. Fell, supra 65.87. E.g. CEPA, supra 13, s. 122; Transportation of DangerousGoods Act, supra 16, s. 11; B.C. Waste Management Act, supra 51,s. 34(10).88. Saxe, supra 2 at 31.89. Saxe, Fines Go Up Dramatically in Environmental Cases. [1989]3 C.E.L.R. (N.S.) 104 at 107-08. See also, Saxe, ibid. at 103-16.90. Metropolitan Toronto (Municipality) v. Siapas (1988), 3C.E.L.R. (N.S.) 122 (Ont.S.C.). See also, R. v. B.E.S.T. PlatingShoppe Ltd. (1986), 1 C.E.L.R. (N.S.) 85 (Ont.S.C.), rev'd inpart (1987) 59 O.R.(2d) 145, 1 C.E.L.R. (N.S.) 145, 19 C.P.C.(2d)174, 32 C.C.C.(3d) 417, 21 O.A.C. 62 (C.A.).37An explanation for the rare use of dual prosecutions withregard to corporate directors might be the heavy onus set on theprosecution; the Ontario Court of Appeal ruled in R. v. Fell in1981 that although the offence in question was one of strictliability, convicting the directing mind required mens rea on hispart, that is, knowledge of the circumstances which make up orconstitute the offence. 91 The situation with a lower levelemployee is totally different; if an employee's behaviour fallsbelow the standard of care expected from a reasonable person inthat person's position, he can be convicted of an offence. Commonlaw of negligence applies. 92 It is important to notice that in astrict liability offence it is possible for an employee to beconvicted even when the corporation is acquitted on the basis ofdue diligence. 93The justification for setting a directing mind on adifferent footing from a lower level employee is questionable. Ifdirecting minds have fostered environmentally negligent corporatepolicy or failed to instruct and train corporate employees, thereshould be no reason to let the management escape from liability.In R. v. United Keno Hill Mines Ltd., Justice Stuart emphasizedthe importance of the personal liability of directors andsupervisors, and noted that "[a] corporate veil should neverafford the slightest measure of special protection to anyone forcriminal conduct." He pointed out that concessions to one class91. Supra 65.92. R.M. McLeod, "Officers' and Directors' Liability" inCorporate Environmental Responsibility & Liability. May 22, 1987CBAO Education & Meeting Centre, Toronto, at 3.93. R. v. St. Mary's Cement Ltd. et al. (1981), 11 C.E.L.R. 15.38of offenders not afforded to others can endanger publicperception of bias and unjustifiable discrimination. 94Most environmental statutes accept the directing mind's mensrea requirement. A typical provision provides that a director isparty to and guilty of an offence if he "directed, authorized,assented to, acquiesced in or participated in the commission ofthe offence". 95 The words are usually held to connote influenceor control and knowledge of the relevant facts. 96 It appears thatthe provision imposes liability on corporate servants only fortheir actual participation or active support of unlawfulactivity. A different approach has been taken in Ontario'senvironmental statutes under which it is not necessary for theCrown to prove the directing mind's mens rea, mere negligentomission to prevent the corporation from causing or permittingpollution is enough. 97 The Ontario approach is in keeping withrecommendations of the Law Reform Commission of Canada when itsuggested that in regulatory offences, criminal liability shouldbe imposed on a directing mind who "simply did not exercisereasonable care to prevent harmful occurrences", and thus failed94. (1980), 10 C.E.L.R. 43 at 54, 1 Y.R. 299 (Y.T.Terr.Ct.). Ithas also been argued that the ruling in Fell is unclear andpossibly not applicable to provincial strict liability offences.See, R.M. McLeod, supra 92 at 3.95. E.g. CEPA, supra 13, s. 122; Transportation of DangerousGoods Act, supra 16, s. 11; B.C. Waste Management Act, supra 51,s. 34(10).96. Saxe, supra 2 at 132.97. E.g. Ontario Environmental Protection Act, supra 22, s. 147a(as am. S.O. 1988, c. 54, s. 49(3)). See also, Saxe, supra 2 at131-40.39to fulfill his responsibilities as a directing mind. 98 Thefailure to give adequate training and supervision to employees orfailure to find out about the hazards of the operation couldprovide a basis for liability. It has been noted that a provisionthat includes negligent omissions serves also certain normativeand educational goals; personal liability of corporate officersemphasizes the officers' duty to govern the corporation in amanner that gives priority to the establishment and properoperation of pollution control systems. 99The question whether convicting the corporation is aprerequisite for convicting directors and officers has been dealtwith in a somewhat random manner in environmental statutes. Someenvironmental statutes provide that the directors and officerscan only be convicted if the corporation has first beenconvicted, 100 while others state that the conviction of thecorporation is not necessary. 101 An even greater number ofstatutes do not deal with the question at all. 102 It has beenpointed out that the diversity does not have any rational reasonbut is rather "a historic relic of the changing fashions in legaldraftsmanship and in regulatory fervour". 10398. Law Reform Commission of Canada, Criminal Responsibility forGroup Action. Working Paper 16, (Ottawa: Information Canada,1976), at 17.99. John Sweigen, Ontario's Environment Enforcement Statute LawAmendment Act, 1986. (1987) 2 C.E.L.R. (N.S.) 14 at 19.100. B.C. Environment Management Act, S.B.C. 1980-1981, c. 14, s.14(4).101. CEPA, supra 13, s. 122; Transportation of Dangerous GoodsAct, supra 16, s. 11; B.C. Pesticide Control Act, R.S.B.C. 1979,c. 322, s. 22(4).102. See Saxe, supra 2 at 136.103. Ibid.402.1.5. Entities LiableThe general common law principle is that the only entity towhich criminal liability can be attributed is a corporation sinceit alone is regarded as a person capable of having rights andduties. 104 However, several statutes include an exception to thisbasic rule; for instance, the Quebec Civil Code l" recognizes apartnership as a legal entity, and according to the CanadaShipping Act106 , a ship may be prosecuted for marine pollution.Similarly, trade unions and employers' organizations can beprosecuted under the Canada Labour Code 107 .Corporate criminal liability does not always cover all formsof corporations. This is particularly the case with public andCrown corporations whose liability is often more limited thanthat of private companies. The problems of such limited liabilityare discussed by Dianne Saxe in her article "Application ofProvincial Environmental Statutes to the Federal Government, ItsServants and Agents." Saxe illustrates the issue with theunreported case of R. v. National Research Council in whichseveral federal government departments and agents were chargedtogether with private corporations for disposing of hazardousindustrial waste.'" While private defendants and the Bank of104. Leigh 1977, supra 28 at 251. The usual method of proof of acorporation is to present in evidence the requisite corporatedocuments from the Registrar of Companies. For the classificationof corporations see, Stanley Beck - Frank Iacobucci - DavidJohnston - Jacob Ziegel, Partnerships and Business Corporations.(Toronto: The Carswell Company Ltd., 1983), at 153-58.105. Quebec Civil Code, art. 1838 (1974).106. Shipping Act, R.S.C. 1985, c. S-9, s. 682.107. Labour Code, R.S.C. 1985, c. L-2, s. 103.108. R. v. National Research Council, Sep. 1987, unreported (Ont.Prov.Ct.), referred to in Saxe, (1990) 4 C.E.L.R. (N.S.) 115.41Canada (a federal body) pleaded guilty and paid fines up to fortythousand dollars, the charges against the National ResearchCouncil and its four employees were quashed after they claimedimmunity from provincial laws. 109Saxe notes that this absurd situation has grown from thelegal tradition which creates a presumption that no statute bindsthe Crown unless it is expressly named therein, or unless thepurpose of the statute would be wholly frustrated unless theCrown were bound. 110 Although some provincial environmentalstatutes still make no attempt to bind the Crown, the situationhas been improving during the 1980s; section 15 of the Charter ofRights has led to extensive litigation challenging Crownimmunities, and some legislative changes have taken place. 111 Forinstance, Ontario's Environment Enforcement Statute Law AmendmentAct of 1986 removed some of the immunities granted tomunicipalities under the Ontario Water Resources Act and repealedthe Crown immunity from prosecution under the same Act. 112Exempting public corporations from criminal liability hasbeen defended with the argument that in effect, the fining ofsaid corporations is to fine the public at large. 113 In R. v.Northwest Territories Power Corp., the court did not accept the109. Ibid at 116.110. See, Interpretation Act, R.S.C. 1985, c. 1-21, s. 17.111. Sweigen, supra 99 at 20.112. See, Ontario Environmental Enforcement Statute Law AmendmentAct, S.O. 1986, c. 68. It has been argued that even if aprovincial statute expressly includes the Crown, it does bind theCrown only in right of that province, not in right of Canada.This would mean that the Crown is immune from provincial statutesexcept where the Crown can be said to have sought the benefit ofthe provincial legislation. See Saxe, supra 108 at 117.113. Leigh 1977, supra 28 at 290.42defendant's argument that since it was a Crown corporation, itdid not have money of its own but only "public money". However,Justice Bourassa acknowledged the problem of "spilling over" andnoted that the cost to the defendant should perhaps include acost that cannot be passed on to the public. 114 In R. v. NorthVancouver, the municipal offender argued that imposition of afine on the municipality would result in money being transferredfrom one government pocket to another. The court rejected theargument, and noted that the fine may have the effect of forcinga change in the municipality's budgeting priorities thus actingas a deterrent. 115Under the present Canadian law, corporations can beprosecuted even after they have been dissolved or amalgamated.The effect of amalgamation was discussed in R. v. Black & DeckerManufacturing Co. by the Supreme Court of Canada. 116 In the case,an information under the Combines Investigation Act was laidagainst the company formed by an amalgamation for an offencecommitted by one of the old companies. The Supreme Court ofCanada ruled that the impact of the amalgamation depends on thewording of the applicable statute which in this case was CanadaCorporation Act. The Court held that since the Act does notextinguish the old company, the new company is liable. 117114. (1989), 5 C.E.L.R. (N.S.) 57 at 61-62 (N.W.T.Terr.Ct.),var'd on other grounds (1989) 5 C.E.L.R. (N.S.) 67 (N.W.T.S.C.).115. (1982) 11 C.E.L.R. 158 at 169.116. 43 D.L.R.(3d) 393, 15 C.C.C.(2d) 193, [1975] 1 S.C.R. 411.117. See, Canada Business Corporations Act, R.S.C. 1985, c. C-44,ss. 186, 226; B.C. Company Act, R.S.B.C. 1979, c. 59, s. 275;Ontario Business Corporations Act 1982, S.O. 1982, c. 4, ss. 178,241(1) as am.432.2. Sentencing Corporations in Environmental Cases"Sentencing is the judicial determination of a legalsanction to be imposed on a person found guilty of an offence."This definition was proposed by the Canadian SentencingCommission in 1987 in its report on sentencing. The Commissionavoided the adjective "criminal" (as in "criminal sanctions")because it wanted to emphasize the fact that the sentencingprocess reaches outside the scope of "true crimes" and theCriminal Code. 118 For instance, the vast majority ofenvironmental offences fall under regulatory legislation whilethe number of actual mens rea environmental offences remainssmall.By using the words "legal sanctions" instead of"punishment", the Sentencing Commission wanted to assert that ofthe two notions included in the concept of sentencing, the notionof obligation and the concept of punishment, the former hasprecedence. The notion of obligation is the more comprehensive ofthe two; sanctions are always unpleasant, while only the mostsevere forms of coercion can be called punishments. 119 In thisstudy, the concept of "penal sanction" is used to describe thesanctions available in the penal provisions of environmentallegislation, thus excluding civil and administrative sanctions.It is important to notice that such traditional civil lawmeasures as a compensation or remedial order can and have been118. Canadian Sentencing Commission, Sentencing Reform: ACanadian Approach. (Ottawa: Government of Canada, 1987), at 115.119. Ibid.44increasingly included in the penal provisions of environmentalstatutes. It is no longer unusual to find a provision providingfor a remedial order or forfeiture among the penal sanctions of astatute.The purpose of the following presentation is to study thepresent Canadian practice of sentencing corporations inenvironmental cases. The section is divided into three parts; thefirst looks at the sentencing rationale, and the objectives andprinciples pursued in sentencing. The second part is devoted toexamining the different criteria employed in the determination ofa sentence, and finally, the third part looks at differentsentencing options available for corporations.2.2.1. Sentencing Rationale, Objectives and PrinciplesThe purpose of a sentencing rationale is to supply thefoundation for sentencing decisions and justify the existence anduse of penal sanctions. A good rationale provides both a reasonand a goal for sentencing which are then pursued throughsentencing objectives and principles.Traditional sentencing rationales can be divided into twocategories of retributivism and utilitarianism. The retributivistview emphasizes punishment as the primary sentencing goal. Moralreasons require that retribution be exacted from those who arefound guilty, and no further justifications are needed.Unlike retributivism, the utilitarian rationale has nothingto do with moral rationales; it is based on the social utility ofsentencing, and regards the objectives of deterrence,45rehabilitation and incapacitation as means for crime preventionand crime control. A threat of sanction or actual conviction isjustified because it reduces or prevents the threat of a greaterevil, crime. The basic difference between the two rationales isthat while the utilitarian approach looks to the future as ameans of justifying the imposition of legal sanctions,retributivists look primarily to the past, focusing on theblameworthiness of the offence committed rather than the futureconsequences of punishment. 120Retributivism and the utilitarian approach have, untilrecently, represented the two fundamental ways of resolving theissue of justification. However, a new approach has beendeveloping during the 1980s which attempts to blend morality andutility in advocating that sanctions should provide compensationfor the victims of crime. The development of this new victimoriented approach is a result of growing concern among the publicthat the courts have been so concerned with the rights of theoffender that they have forgotten the rights of the victim. 121How these rationales and the objectives and principles theyembrace are being applied to sentencing corporations inenvironmental cases will be looked at next.120. Ibid. at 127-28.121. Ibid. at 128.462.2.1.1. RetributionThe original idea of retribution, that of vengeance, hasbeen rejected by the Canadian courts. 122 Denunciation and removalof unjust enrichment have replaced revenge as the primaryobjectives of retribution, and the idea of a deserved punishmenthas turned into just deserts and the principle ofproportionality.The Canadian Sentencing Commission defines denunciation asbeing "essentially a communication process which uses the mediumof language to express condemnation" . 123 The purpose ofdenunciation is to express society's abhorrence and disapprovaltowards certain kind of conduct, and thereby brand the conduct asreprehensible. The degree of denunciation achieved is dependentupon the publicity of the condemnation; from this perspective,the historical pillory represented an ideal tool fordenunciation.In public welfare cases, denunciation has not beenrecognized as an independent sentencing objective. However, someevidence on the existence of denunciation can be found; in R. v.Panarctic Oils Ltd., Justice Bourassa remarked that "[dumping]should become a banned word, an immoral concept. "124 In R. v.Cotton Felts Ltd., denunciation was regarded as an aspect ofdeterrence. In the decision, the court described deterrence asbeing composed of two aspects; the negative aspect of punishment122. See for example, R. v. Hinch and Salanski, [1968] 62 W.W.R.205 (B.C.C.A.); George Fletcher, Rethinking Criminal Law.(Toronto: Brown, 1978) at 408-20.123. Sentencing Reform, supra 118 at 142.124. (1983), 12 C.E.L.R. 78 at 84 (N.W.T.Terr.Ct.).47is based on achieving compliance by threat of punishment, whilethe positive aspect emphasizes community disapproval of an act bybranding it as reprehensible. The court considered the positive,morally educative aspect of denunciation particularly applicableto public welfare offences and declared a hope that "a personwith an attitude thus conditioned to regard conduct asreprehensible will not likely commit such an act." 125 Similarly,in R. v. Canadian Marine Drilling Ltd., Justice Bourassaexpressed a wish that public denunciation, as a result of theconviction, may act as a deterrent and encourage bettercompliance in the future. 126Removing unjust, illegally gained enrichment is the secondsense in which retribution has been applied. According to P.C.Weiler, those who do not comply with laws and regulations gain anunfair advantage over law abiding citizens in the distribution ofscarce benefits. Therefore "punishment is necessary to removethat unjust enrichment from the offender and so secure a justequilibrium on behalf of those who were willing to be lawabiding. " 127 Such considerations were obviously in the mind ofJustice Stuart in United Keno Hill Mines when he remarked that"[t]he assessment of a fine based on illegally obtained gains is125. (1982), 2 C.C.C.(3d) 287 at 295. See also, R. v. RichardLehnen and Wildwood Camperland (Canada) Inc. (185), 14 C.E.L.R.32 at 34.126. (1983), 13 C.E.L.R. 8 at 13, [1984] N.W.T.R. 48, 51 A.R. 359(N.W.T.Terr.Ct.).127. P.C. Weiler, "The Reform of Punishment" in Studies onSentencing. Law Reform Commission of Canada (Ottawa: InformationCanada, 1974), at 173, quoted in John Sweigen - Gail Bunt,Sentencing in Environmental Cases. A Study Paper prepared for theLaw Reform Commission of Canada (Ottawa: LRCC, 1985), at 10.48essential to ensure that non-complying corporations do notacquire an economic advantage over complying competitors. "128 Theimportance of recompensating the offender's law-abidingcompetitors was also acknowledged by the sentencing judge in R.v. Richard Lehnen and Wildwood Camperland (Canada) Inc. when henoted that a "mere slap on the wrist" penalty means "unfairnessto those who at considerable personal expense observed therequirements". 129Although the notion of depriving the offender from illegallygained profits comes up frequently in sentencing, the deprivationis generally backed by deterrent motives. Courts argue that inorder to deter, the penalty must show that "the crime does notpay", and one way to achieve this goal is to deprive the offenderfrom the profits of the crime. 130 In such rulings, the objectiveis to prevent further crimes rather than compensate theoffender's law-abiding competitors.Unlike denunciation and removal of unjust enrichment, thenotion of just deserts does not specifically address the issuessurrounding the general objectives of sentencing, but ratherinfluences the allocation of sanctions by advocating theprinciple of proportionality. 131 Proportionality consists of two128. Supra 94 at 51.129. Supra 125 at 34.130. R. v. Browning Arms Company of Canada (1974), 18 C.C.C.(2d)298 (Ont.C.A.); R. v. Ocean Construction Supplies Ltd. (1974), 61D.L.R.(3d) 323 (B.C.C.A.); R. v. Simpsons Ltd. (1989), 25C.P.R.(3d) 43 (Ont.Dist.Ct.).131. The principle of proportionality was recognized in R. v.Heck (1963), 40 C.R. 142 (B.C.C.A.); R. v. Wilmott, [1967] 1C.C.C. 171 (Ont.C.A.). The most influential advocate of justdeserts has been American Andrew von Hirsch. His main concern wasnot to justify the imposition of punishment but rather to limit49aspects; firstly, it entails the idea of balance between theconduct and penalty by mandating that the quantum of a sanctionreflects fairly the seriousness of the offence. Secondly, theprinciple requires that similar offences are treated alike. 132The two components of proportionality were expressed in thepolicy objectives set in "The Criminal Law in Canadian Society",according to which "the criminal law should provide sanctions forcriminal conduct that are related to gravity of the offence andthe degree of responsibility of the offender", and "persons foundguilty of similar offences should receive similar sentences wherethe relevant circumstances are similar". 133The first aspect, that of balance between the conduct andpenalty, requires determining the harm caused or risked by theact and the culpability of the actor. Considerations regardingthe elements of harm and culpability are examined in more detailin section under the headings "Harm" and "Intent".The call for like penalties in like offences emphasizes suchfactors as uniformity and equity in sentencing. Uniformity ofsentencing has been acknowledged as recently as in 1989 in R. v.Oxford Frozen Foods Limited. In the decision, the courtscrutinized the fines imposed on similar type of cases and cameto the conclusion that the fine imposed by the lower court wasnot in line with general sentencing practice and thereforethe quantum of punishment meted out to the offender. See, infra132.132. Schleger, supra 35 at 53; Andrew von Hirsch, Doing Justice:The Choice of Punishments. (New York: Hill & Wang, 1976) at 66-76.133. Supra 1 at 53.50lowered the fine. 134 In R. v. Echo Bay Mines Ltd., Justice Ayottewarned against resorting too much on sentencing practice bypointing out that "any attempt to...extract some tariff ofsentencing from decided cases" is a "futile exercise" because"[e]ach sentence must be decided on its own facts". Herecommended that sentencing practice should be used more forproviding general guidelines than for fixing the precise amountof the fine. 135A survey to the Canadian sentencing practice inenvironmental cases reveals that although superficially rejected,the retributivist perspective comes up frequently in sentencing.Essentially retributivist objectives are often muddled andconfused with utilitarian goals, thus making it difficult toidentify the true rationales behind sentencing decisions. Thetendency to connect retributivism with some kind of "an eye foran eye" principle might be an explanation for the generalreluctance to accept and acknowledge retributive considerationsas cogent sentencing objectives. A blind assertion that crimesshould be punished because they are crimes does not appeal totoday's judiciary.A further reason for the disregard of retribution seems tolie in the nature of environmental offences. Since the vastmajority of the cases are strict liability offences in which theelement of fault has been eliminated, courts frequently regardenvironmental offences as morally blameless in contrast to "real"134. (1989), 5 C.E.L.R. (N.S.) 37 (N.S.Co.Ct.).135. (1980), 12 C.E.L.R. 38 at 42 (N.W.T.Terr.Ct.)51mens rea crimes. 136 John Sweigen and Gail Bunt summarize theirstudy on sentencing by noting that"there does seem to be an ambivalence in the minds of judges as towhether environmental offences are morally reprehensible, so thatthe sentence must express repudiation, or morally neutral, so thatdeterrence is the governing factor... :137The latter, deterrent approach has at least superficially gainedmore popularity among sentencing judges. Deterrence and otherutilitarian objectives will be examined in more detail next. Social utilityThe utilitarian rationale pursues crime prevention andreduction through such objectives as rehabilitation,incapacitation, and deterrence. In addition to these traditionalobjectives, the goals of providing respect for law and protectionof the public can be classified under the utilitarian rationale.The purpose of rehabilitation is to alter an offender's"characters, habits, or bahaviour patterns so as to diminish hiscriminal propensities". 138 Although the most popular applicationof rehabilitation, that of treatment, has been rejected as ameans to change corporate behaviour, 139 the possibility ofrehabilitating corporations through some other measures comes upoccasionally in sentencing. 140 For instance, in Panarctic Oils,Justice Bourassa noted that the "corporate defendant is...acandidate for rehabilitative measures because...it is a rational136. R. v. Sault Ste. Marie, supra 41.137. Sentencing in Environmental Cases, supra 127 at 40.138. von Hirsch, supra 132 at 11.139. Sentencing in Environmental Cases, supra 127 at 12.140. See, for example, R. v. Echo Bay Mines Ltd., supra 135; R.v. United Keno Hill Mines Ltd., supra 94.52being, and reason will presumably work." 141 The sentencingobjective in the case is clearly rehabilitative when he notesthat "deterrence in this particular case means effecting forevera complete and utter excision of the concept of dumping fromcorporate defendant's inventory of options. "142 The measure hechose for rehabilitation was intervention with corporateoperations through a probation order; the court employed (theformer) section 663 of the Criminal Code and placed thecorporation on probation for two years. The terms of theprobation were that the corporation "be of good behaviour and notbreach the peace", and that the corporation must file with thecourt a detailed written policy for correcting the situation thatled to the offences. The court noted that it would have beenunsatisfactory to leave the question of resolving the problemthat led to the offences wholly in the hands of the corporation,especially since the corporation had shown signs of "lots of talkbut little action. "143In Panarctic Oils, the intervention was limited to theactual operation methods of the corporation. Another possibilitywould be to extend the intervention to corporate structure anddecision-making by remedying the internal process that led toillegal conduct. In Panarctic Oils, Justice Bourassa explicitlyrejected this kind of direct interference and noted that "I do141. Supra 124 at 90.142. Ibid. at 84.143. Ibid.53not believe it is open for a Court to tell a corporation how torun its business." 144An aspect of rehabilitation that has not gained muchattention in Canadian courts is the notion of socialresponsibility. While the corporate ambition to make profitcannot (and should not) be "cured", the way and means by whichthe corporation pursues the profit can be influenced. A sociallyand environmentally irresponsible "whatever it takes" mentalityshould not be accepted as "a necessary part of doing business".Such considerations were briefly discussed in R. v. NorthVancouver when the court noted that "a substantial fine may wellprovide the impetus for a realistic re-assessing of corporateconsciousness about environmental responsibility." 145 Thecapabilities of penal sanctions to change corporate attitudesshould not, however, be overestimated. To alter the very ideologyof pursuit-of-profit-at- any-cost obviously requires some veryfundamental societal changes that cannot be accomplished throughlegal measures alone.The second utilitarian objective, that of incapacitation, isbased on the idea of preventing further crimes by incapacitatingthe offender, and thus making it impossible for him to continuehis illegal conduct. In the traditional sense, this has almostalways meant removing the offender from society throughimprisonment, a measure that is not applicable to corporateoffenders. However, incapacitation can work in a more innovative144. Ibid. at 94.145. Supra 115 at 170.54manner, namely by incapacitating the offender from the means tocommit further offences. In practice, this could happen byforfeiting an object or property which was used in committing theoffence or revocing permits or licences to operate. The scarceselection of such measures is discussed in more detail in section2.2.3.4. under the heading "Forfeiture".The objective of deterrence is raised either expressly orimplicitly in almost every environmental offence, and it isregularly referred to as the most central sentencing objective inenvironmental cases. 146 In spite of its popularity, the contentsof the term "deterrence" remain somewhat ambiguous and the termis often confused with other sentencing objectives. In this work,"to deter" means "to discourage or stop by fear, to stop orprevent from acting or proceeding by danger, difficulty, or otherconsideration which disheartens or countervails the motive forthe act." 147 Hence, the essence of the concept is a threat thatis used as a disincentive against undesirable conduct.Normally deterrence is divided into general and specialdeterrence. 148 Special deterrence is aimed at discouragingrecidivism, preventing the offender in question from committing146. R. v. Kenaston Drilling (Arctic) Ltd. (1973), 12 C.C.C.(2d)383 (N.W.T.S.C.); R. v. Sheridan (1972), 10 C.C.C.(2d) 545(Ont.Distr.Ct.); R. v. Blackbird Holdings Ltd. (1990) 6 C.E.L.R.(N.S.) 119 (Ont.Prov.Off.Ct.), var'd Crowe et al. v. The Queen(1991), 6 C.E.L.R. (N.S.) 138 (Ont.Ct. of Justice), aff'd R. v.Crowe (1991) 6 C.E.L.R. (N.S.) 116 (Ont.C.A.); R. v. The CanadaMetal Company (1980), 11 C.E.L.R. 28 (Ont.Co.Ct.); R. v.Panarctic Oils Ltd., supra 124.147. Black's Law Dictionary, supra 9 at 536.148. Contrary to this traditional division, von Hirsch regardsspecial deterrence as a particular application of generaldeterrence, not as an independent category. See, von Hirsch,supra 132 at 38n.55further crimes, while the aim of general deterrence is to preventother potential offenders from committing similar violations.Both elements of deterrence appear frequently in environmentalcases. As noted by Justice Camblin in R. v. North Vancouver:[r]educed to the fundamentals, the aim of the courts in sentencingfor environmental offences is, and should be, to curb thepotential for such offences in the future whether by thedefendant or by others [emphasis added]. 1 '*9Of the two elements of deterrence, that of generaldeterrence is generally regarded as the more prominent one. In R.v. Cyprus-Anvil Mining Corp., the court ruled that even when themaximum fine is insufficient to deter the offender in questionbecause of its size and wealth, imposing the maximum fine canstill be justified because of its general deterrence. 15°Similarly, in R. v. Esso Resources Canada Ltd., although thecompany's policies and procedures were of a very high standard,and the court was satisfied that "the defendant is prepared to doeverything the law requires and more", the court went on toimpose a substantial sentence on the basis of "deterring anyoneelse. ,,151As mentioned above, deterrence consists of the threat ofsomething unpleasant. For corporations, the primary threatappears to be the financial consequences of the convictionbecause "problems on the profit and loss sheet...is whatcompanies know most about." 152 A frequently repeated citation was149. Supra 115 at 170.150. (1975), 5 C.E.L.R. 116, 2 F.P.R. 30 (Y.T.Mag.Ct.), aff'd(1976), 5 C.E.L.R. 117, 2 F.P.R. 32 (Y.T.C.A.).151. [1983] N.W.T.R. 59 at 63-66 (N.W.T.Terr.Ct.).152. R. v. Oxford Frozen Foods Ltd., supra 134 at 51.56made by Justice Morrow in R. v. Kenaston Drilling (Arctic) Ltd.when he noted that[w]here the economic rewards are big enough persons orcorporations will only be encouraged to take what might be termeda calculated risk. It seems to me that the Courts should deal withthis type of offence with resolution, should stress the deterrent,viz., the high cost, in the hope that the chance will not be takenbecause it is too costly. 153An important limitation to deterrence was announced in R. v.McNamara, when the court ruled that although the generaldeterrence requires that the fines are substantial and exemplary,they may not be "crippling or vindictive". 154 Also the principleof proportionality seems to act as a force resistant todeterrence; in R. v. Oxford Frozen Foods Ltd., the court loweredthe fine on the basis of uniformity in sentencing. According tothe decision, the lower court had overemphasized the question ofdeterrence and disregarded the principle of uniformity. 155The objective of deterrence is strongly connected to publicwelfare offences which are often regarded as not being prohibitedbecause they are wrong in themselves but because of theirpotentially grave consequences. 156 Consequently, there is acertain morally neutral stigma attached to environmental offencesin which no mens rea is required. Justice Stuart questioned theidea of moral neutrality in United Keno Hill Mines by noting that[t]he range of inherent_fg4Wmallty in pollution offences can beextreme. Actions may be negligent or premeditated and theramifications may range from trivial littering offences to153. Supra 146 at 386.154. Supra 78 at 527.155. Supra 134 at 53.156. Sentencing in Environmental Cases, supra 127 at 10-11.57offences precipitating untold destruction to resources, propertyand in some cases death. 157The courts have, to some degree, acknowledged the wide variety ofenvironmental offences, and although generally emphasizingdeterrence as the primary motivation in their decisions,retributive considerations can often be found "between thelines".In addition to traditional deterrence, rehabilitation, andincapacitation, two frequently mentioned utilitarian sentencingobjectives are providing respect for the law and the protectionof the public. 158 Providing respect for the law has becomepopular since the publication of the Canadian SentencingCommission's report "Sentencing Reform: A Canadian Approach" in1987. In the report, the Commission recommended that thefundamental purpose of sentencing should be "to preserve theauthority and promote respect for the law through the impositionof just sanctions". 159 The recommendation was followed in R. v.Gulf Canada Corp. which pointed out that "[t]he goal ofsentencing must be to uphold the law over and above otherconsiderations and any penalty should seek to encourage law-abiding as a core value." 160 The role of sentencing in providingrespect for the law was acknowledged by Justice deWeerdt in R. v.157. Supra 94 at 47.158. "Protection of the public" is frequently used in allsentencing. According to a study accomplished by the CanadianSentencing Commission, 88% of the surveyed judges saw protectionof the public as the primary purpose of sentencing. See,Sentencing Reform, supra 118, at 145. See also, R. v. The CanadaMetal Company, supra 146; R. v. Le Chene No. 1 (1987), 2 C.E.L.R.(N.S.) 273 (N.W.T.Terr.Ct.).159. Ibid. at 151.160. (1987), 2 C.E.L.R. (N.S.) 261 at 261.58Placer Development Ltd., a case in which the accused wasconvicted of nine offences under the Northern Inlands Waters Act,as follows:[t]he whole point of the requirements for licenses andauthorizations under the legislation is to ensure the public thatthe waters in the public domain in the two northern territorieswill not be interfered with in ways beyond public control. It istherefore essential that these requirements be enforced in such away as to give meaning to them [emphasis added]. ibiThe protection of the public comes up in several differentcontexts; sometimes it is referred to as one of severalobjectives without any priority while at other times it is usedas an overall purpose of sentencing that is to be accomplishedthrough secondary objectives of retribution, rehabilitation, ordeterrence. Another way in which the concept has been applied isto describe the paramountcy of society's needs and interests tothose of individual interests when the two appear to conflict. 162In short, the protection of the public seems to be an extremelyconvenient, although ambiguous term to which the courts can referto in almost any sentencing case. The diversity and ambiguity ofthe concept becomes clear when one notices that the protection ofthe public is, a lot more than a mere sentencing objective; theCanadian Sentencing Commission has aptly pointed out that whileit may be appropriate to ascribe the overall goal of protectionof the public to the criminal justice system as a whole, it ishardly justifiable to assign the sentencing system the samegoal. 163161. (1982), 12 C.E.L.R. 58 at 61.162. Sentencing in Environmental Cases, supra 127 at 8-10.163. Sentencing Reform, supra 118 at 146-47.592.2.1.3. Rights of the VictimRedressing the crime victims and repairing the damages havenot received much attention from supporters of retribution or theutilitarian approach. Traditionally, repairing the damage andpaying compensation to the victim of the offence have beenregarded as a part of the civil procedure. The courts have beenreluctant to impose restitution or compensation orders, fearfulof turning into some kind of collection agencies. 164The negative attitude towards redress is reflected in thepresent sentencing theories which are absorbed with seeking"justifications for punishment", neglecting the bigger picture ofsentencing that includes both punishment and obligations. 165Consequently, in the present system, strong emphasis lies on thepunitive aspects of sentencing. The Canadian SentencingCommission has noted that a problem with this kind of anunbalanced situation is that "it tends to degenerate into a self-fulfilling prophecy"; if only the most punitive aspects ofsentencing are accentuated, sentencing will result in increasedseverity, thus making change more difficult. 166The victim orientated approach started at the end of the1970s from the growing concern among the public that the courtswere so occupied with the rights of the offender that they hadforgotten the rights of the victim. It was stated in "TheCriminal Law in Canadian Society" in 1982 that164. Sentencing in Environmental Cases, supra 127 at 69.165. Sentencing Reform, supra 118 at 108.166. Ibid. at 108.60[t]o the victim, it may at times appear that the criminal justicesystem is overly concerned about "solemn ritual" and thepunishment of the offender, and insufficiently concerned with thevictim's financial losses and needs. 167The new approach does not attempt to replace the twomainstream rationales but tries rather to blend morality andutility in advocating that sanctions should provide redress forcrime victims. 168One strong supporter of the victim orientated approach isthe Law Reform Commission of Canada; the Commission hasfrequently suggested that imposing sanctions encouragingreconciliation and redress to the victim, such as restitution andcompensation, would appear to be appropriate in a majority ofoffences and particularly so in environmental cases.'"The present sentencing practice in environmental cases doesnot, however, pay much attention to the position of the victim.Occasionally, the harm to the victim is taken into considerationas a sentencing factor - the greater the harm the higher the fine- but actual restitution or compensation orders are rareexceptions.'" Similarly, although the harm to the environment isfrequently regarded as a factor in sentencing, remedial ordersremain a rarity among penal sanctions. 171 However, some changesin recent environmental legislation give reason to believe that167. Supra 1 at 30.168. Sentencing Reform, supra 118 at 128.169. Law Reform Commission of Canada, Restitution andCompensation and Fines. Working Papers 5 & 6. (Ottawa:Information Canada, 1974), at 6-7. See also, Law ReformCommission of Canada, The Principles of Sentencing andDispositions. Working Paper 3. (Ottawa: Information Canada,1974), at 19; Sentencing in Environmental Cases, supra 127 at 69.170. See, Sentencing in Environmental Cases, ibid. at 20.171. Ibid. at 18-19.61the neglected position of a victim is becoming more widelyacknowledged; for example, sections 130(I)(b) and 131(1) of theCEPA provide, respectively, for remedial orders and compensationfor the loss of property. Similar types of provisions can befound in the 1987 Manitoba Environmental Act. 172 Also, the 1988amendment of the Criminal Code laid strong emphasis on the rightsof the victim. 173 The remedial sanctions provided in these andother statutes will be discussed in more detail later in thischapter.2.2.2. Sentencing CriteriaA number of commonly considered sentencing criteria haveevolved in case law that are intended to reflect the broaderobjectives discussed above. The criteria and an assessment oftheir practical application is presented in this section.Sentencing process consists of two basic decisions; thequality and quantity of the sentence. Generally, the firstconsideration is to determine the specific type of sanction usedin a particular case. This is followed by assessing the quantumof the penalty. Since in the majority of environmental cases theonly available or only applied sentencing option for corporateoffenders is a fine, the following presentation concentratesprimarily on observing the criteria for assessing the quantum ofa fine. The section is divided into three parts, the first partdealing with offence-related factors, the second part with172. Supra 22, ss. 36(b) and 36(c).173. An Act to amend the Criminal Code (Victims of Crime). S.C.1988, c. 30.62offender-related factors, and the third part examines otherfactors that influence sentencing.The leading Canadian case with respect , to sentencing factorsin environmental cases is R. v. United Keno Hill Mines Ltd. from1980. 174 The case together with John Sweigen and Gail Bunt'sstudy "Sentencing in Environmental Cases" (published in 1985)form the basis for the presentation. 1752.2.2.1. Offence-related factors A) HarmThe extent of both actual and potential damage is often verydifficult to determine in environmental cases. For one thing, theeffects of violation may not be immediately measurable; damagecan be latent or cumulative and show up in two years or twentyyears following the incident. Secondly, the damage might not bemeasurable at all. Harming human life, health, or property can beassessed with some degree of accuracy, but how can one measuredestruction of an ecosystem? Destroying a unique species orharming a link in an ecosystem has no immediate monetary valueand there is no measurements for assessing such losses.In spite of the difficulties, the presence of potential oractual harm to the environment or human beings appears to be oneof the most important stimulus in sentencing. The courts aredivided in their approach to the notion of harm; some of thecourts stress deterrence and impose substantial penalties even in174. Supra 94.175. Supra 127.63the absence of actual damage while others emphasize the resultsof violation as the primary factor and refuse to punish theoffender for something that cannot be proved. 176 The latter,"backward" looking approach is generally connected to theretributivist idea of just deserts and the principle ofproportionality.The former deterrence orientated approach was first adoptedin Kenaston when the court ruled that the basis for substantialpenalty should be the risk of harm instead of actual harm. 177 Thevalidity of this approach was confirmed by the observation in R.v. Canadian Marine Drilling Ltd. that damage is not even anelement in many environmental offences. 178 Similarly, inPanarctic Oils, the court ruled that harm was not a factor to betaken into consideration unless there is concrete evidence ofserious harm which would then be regarded as an aggravatingfactor. In the Panarctic decision, Justice Bourassa paid specialattention to the cumulative nature of pollution by noting that"the destruction of any ecosystem or environment is a gradualprocess, effected by cumulative acts - a death by a thousandcuts, as it were." Consequently, each offender is equally176. Ibid. at 17-18.177. Supra 146.178. Supra 126. For example, s. 34(1) of the Fisheries Act hasbeen interpreted to mean that when determining whether theoffence under s. 36(3) has been completed the key factor is theharmful nature of the substance, not the state of the water afterthe deposition. The offence is complete without ascertainingwhether the water itself was rendered deleterious, and thereforethere is no need to show actual harm to fish but potential harmis enough. See, R. v. MacMillan Bloedel (Alberni) Ltd. (1979), 47C.C.C.(2d) 118 at 121-22; R. v. Jack Cewe Ltd. (1981), 10C.E.L.R. 120.64responsible for the total harm and "[t]he first offender can't beallowed to escape with only nominal consequences because hisinput is not as readily apparent." 179Although courts have generally adopted the Kenaston approachin their sentencing and continue to cite the case regularly, 180some courts insist on using the absence of actual damage as ajustification for imposing low fines. 181 The case on which thecourts support their preoccupation is United Keno Hill MinesLtd. in which Justice Stuart ruled that in absence of proof aboutactual damage a substantial penalty is inappropriate. 182 However,when reading the case carefully, it becomes obvious that JusticeStuart did not deny the role of potential harm as a sentencingfactor but rather emphasized the Crown's duty to show evidence ofpotential damage.An interesting aspect to the question of harm was brought upin R. v. Gulf Canada Corp. in 1987 when Justice Bourassa notedthat "there is no harm to the environment, but there is harminflicted upon the process of environmental protection." Heregarded providing respect for law as the primary objective of179. Supra 124 at 85-86. A similar approach was taken in R. v.Falconbridge Nickel Mines Ltd. (1982), 12 C.E.L.R. 135(Ont.Prov.Ct.) when the court refused to regard the fact that thedischarged water was less impaired than the water in the lakeinto which it was discharged as a mitigating factor insentencing.180. R. v. Esso Resources Canada Ltd., supra 151 at 63; R. v.Ocelot Industries Ltd. (1983), 13 C.E.L.R. 77 at 81-82; R. v.Northwest Territories Power Corp., supra 114 at 63,; R. v.Imperial Oil Ltd. (1988), 4 C.E.L.R. (N.S.) 98 at 104-05(Man.Prov.Ct.).181. R. v. Western Stevedoring Co. (1984), 13 C.E.L.R. 159 at161-62 (B.C.Co.Ct.); R. v. Cyanamid Canada Inc. (1981), 11C.E.L.R. 31 at 40-41 (Ont.Prov.Ct.).182. Supra 94 at 47-48.65sentencing and noted that the objective enables substantialpenalties in cases where there is no evidence of harm to theenvironment. 183As noted before, compensating the victim and paying for orrepairing damage has traditionally been regarded as belonging tothe civil procedure. However, when assessing the size of a fine,courts have occasionally paid attention to the effects of theoffence on an individual victim or society as a whole; in Quebec,the fact that for two years the residents of a town had beenforced to carry water to their homes as a result of pollution inthe river was taken into consideration in R. v. Gregoire. 184 Inanother Quebec case, a fine of ten thousand dollars was imposedbecause the pollution in a river had forced one neighbour tospend six thousand dollars to construct a private aqueduct, andhad deprived other neighbours of water for drinking and for theircattle for a long period of time. 185 Negative health effects,such as nausea, headaches, respiratory ailments as well ascomplaints of odors have also been considered in sentencing. 186The cost of reparations to the government was taken into accountin R. v. Jackson Bros. Logging Co. when the fine of $6,000 was183. Supra 160 at 267. See also R. v. Echo Bay Mines Ltd., supra135.184. R. v. Gregoire, Dec. 11, 1981, District of St-Hyacinte, No.27-001200-81 (Prov.Ct.), referred to in Sentencing inEnvironmental Cases, supra 125 at 20.185. R. v. Choquette, Feb. 6, 1981, District of St-Hyacinte, No.750-27-3221-78 (Court of Sessions of Peace), referred to in ibid.186. R. v. Tricil, reported in (1978) 3:6 CELA Newsletter 84(Ont.Prov.Ct.); R. v. Nacan Products Ltd., Oct. 13, 1982,unreported (Ont.Prov.Ct.), referred to in ibid.66calculated to represent an amount equivalent to that expended bythe government in restoring the area. 187The question to what extent the consequences should be takeninto consideration in sentencing was answered in R. v. Parks, acase in which the offender caused the death of two persons whiledriving impaired. The Ontario Appeal Court ruled that "the tragicconsequences constitute a relevant factor, although one thatshould not magnify the offence so as to make the sentencedisproportionate to its intrinsic gravity." 188 The decisionappears to support the principle of proportionality which entailsthe idea of balance between the conduct and penalty by mandatingthat the quantum of a sanction reflects fairly both the harmcaused or risked by the act and the culpability of the actor.B) IntentAlthough it is submitted that mens rea is not an element instrict liability environmental offences, in practice the lack of"guilty mind" appears to function as a downward force on the sizeof the fines.'" The courts have by implication made lack ofintent a mitigating factor by virtue of their consideration ofthe "criminality of conduct". For instance, in United Keno HillMines, Justice Stuart noted that "[a]ccidents, innocent mistakes,?187. R. v. Jackson Bros. Logging Co., [1984] 4 W.W.R. 563, 14C.C.C.(3d) 1 (B.C.Co.Ct.). See also, R. v. Blackbird HoldingsLtd., supra 144; R. v. B.L.S. Sanitation, Sept. 8, 1976,unreported, Sudbury (Ont.Distr.Ct.) at 5, referred to in ibid. at21..188. R. v. Parks (1982), 39 O.R.(2d) 334 (C.A.) at 336.189. See, Sentencing in Environmental Cases, supra 127 at 22.67and not reasonably foreseen events are less damnable than wilfulsurreptitious violations." 190Hence, in , sentencing practice, categorizing mostenvironmental offences under the label of strict liability hasled to a trivializing of environmental offences; courtsapparently hesitate to inflict heavy penalties that carry amorally condemning stigma on a person or a corporation who mighthave unknowingly become a criminal. Before Sault Ste. Marie thisapproach may have been justified as a measure to relieve theharshness of the sharp division between absolute liability andmens rea offences. However, after the "half-way house" of strictliability and defence of due diligence were created in Sault Ste.Marie, justifications for treating "mere" negligence as amitigating factor lost their relevance. Furthermore, it must beborne in mind that an important reason behind the development ofabsolute and strict liability was the difficulty of proving mensrea in public welfare cases, not "moral neutrality" of theseoffences. 191It has been noted that instead of regarding the lack ofintent as a mitigating factor, "[a] more logical approach...wouldbe to consider intent only at the other end of the spectrum, thatis, wilfulness or recklessness as an aggravating factor. " 192 Somedecisions support this train of thinking; for instance, such190. Supra 94 at 49. See also, R. v. Esso Resources Canada Ltd.,supra 151; R. v. Oxford Frozen Foods Ltd., supra 134; R. v.Western Stevedoring Co., supra 181; R. v. Robinsons' TruckingLtd. (1985), 14 C.E.L.R. 90 (N.W.T.Terr.Ct.).191. See generally, Paulus, supra 40; Sentencing in EnvironmentalCases, supra 127 at 22.192. Sentencing in Environmental Cases, ibid.68elements as deliberateness, recklessness, and a cavalierdisregard for the regulations have been regarded as conditionsfor placing an offence in the "worst case" category. A well, thefact that an offence was a "calculated risk" whereby the flagrantviolation was profit motivated and carried a low likelihood ofdetection, has been regarded as an aggravating factor. 193C) Fruits of the crime It has been noted that "[i]f a fine is to be effective inachieving the objectives of retribution and deterrence, it mustat least approximate the dollar value of the fruits of thecrime." 194 In United Keno Hill Mines, the court ruled that thesavings or gain derived from the offence, "the fruits of thecrime", should be regarded as a sentencing factor. The court heldthat profits or savings realized as a consequence of an offenceshould generally establish the minimum fine while other mattersconsidered should increase the amount of the fine. 195 The factorhas been frequently interpreted as meaning that if no profit hasbeen made through the illegal conduct, the lack of profit shouldbe regarded as a mitigating factor when assessing the size of afine. 196193. R. v. Cyprus-Anvil Mining Corp., supra 150; R. v. PanarcticOils Ltd., supra 124; R. v. Echo Bay Mines Ltd., supra 135.194. Sentencing in Environmental Cases, supra 127 at 22. Seealso, Criminal Responsibility for Group Action, supra 98 at 39.195. Supra 94 at 51. See also, R. v. Ocean Construction SuppliesLtd. (1975), 61 D.L.R.(3d) 323 (B.C.C.A.).196. R. v. Oxford Frozen Foods Ltd., supra 134; R. v. OcelotIndustries Ltd., supra 180.69The importance of depriving an offender of the fruits of thecrime has been recognized in recent environmental legislation.Several of the environmental statutes enacted in the 1980sprovide for a so called "additional fine" which is employed whenthe economic benefits from breaking the law exceed the maximumfine. In such cases, courts may impose an additional penaltyequivalent to any savings or gain derived from the offence. 197Both retributive and utilitarian sentencing rationales havebeen used to provide a justification for forfeiting the profitsof a crime from a corporate offender. The deterrent effect hasbeen emphasized particularly in trade and tax cases; forinstance, in R. v. Browning Arms Co. of Canada, the court levieda ten thousand dollar fine expressly calculated to deprive thecompany of its net profits derived from a trade offence whileruling that "the Court must do its best to see to it that thefine is of sufficient quantum to take away any profit...and...tobe a strong deterrent. " 198 A clear retributivist objective ofremoving unjust enrichment appeared in United Keno Hill Mines,when Justice Stuart ruled that "[t]he assessment of a fine basedon illegally obtained gains is essential to ensure that non-complying corporations do not acquire an economic advantage overcomplying competitors." 199197. CEPA, supra 13, s. 129; Manitoba Environment Act, supra 22,s. 36(d); Ontario Environmental Protection Act, supra 22, s.146(c) (as am. S.O. 1986, c. 68, s. 15); Ontario Water ResourcesAct, R.S.O. 1980, c. 361, s. 70 (as am. S.O. 1986, c. 68, s. 41);Ontario Pesticides Act, R.S.O. 1980, c. 376, s. 34b (as am. S.O.1986, c. 68, s. 47).198. Supra 130 at 300-01.199. Supra 94 at 51.702.2.2.2. Offender-related factors A) Size and wealth of the corporationThe size and wealth of a corporation is frequentlyconsidered as a factor in sentencing. The factor is considered inrelation to the corporation's ability to pay as well as for theimpact of the penalty upon the corporation. With regard to thecompany's size and wealth two conflicting interests meet; on onehand, the penalty must be of sufficient magnitude so that thecost is not "readily absorbed as a simple cost of doingbusiness". 200 On the other hand, the courts should avoid"destroying the economic viability of the corporation by imposinga crippling fine". 201 Special attention has also been paid tolarge corporations who are regarded as generally holding greaterrisks for severity of impact of their wrongdoings, as stated byJustice Stuart in United Keno Hill Mines: "[t]he scope ofcorporate activities has a multiplier effect on the extent andseverity of risk potential flowing from corporate action." 202The biggest problem with the size and wealth factor is thequestion of evidence. The problem is particularly difficult withprivate or closely held corporations which are not by lawrequired to make public reports. Some possible factors thatshould be considered include "such matters as profits, assets,current financial status, and characteristics of the relevantmarket". 203 In Panarctic Oils, the court noted that when200. Ibid. at 50.201. Ibid. See also R. v. Blackbird Holdings Ltd., supra 146.202. Ibid. at 48.203. Ibid. at 50.71impecunity is at issue in sentencing, the convicted corporationis obligated to tender evidence to that effect. Otherwise, thecourt will take judicial notice as to the size and wealth of thecorporation. 204A judicially unresolved issue arises respecting sentencingof small subsidiary corporations. The problem is of particularimportance in branch-plant economies such as Canada. If thecourt's attention focuses solely on the financial standing of theindividual subsidiary unit that committed the forbidden act, itbecomes easy to channel the corporate activities in such a mannerthat small subsidiaries or branches will attend to theenvironmentally suspicioUs operations and if caught, pay for theconsequences with their limited assets. The mother company willescape the liability and transfer the illegal activity to anothersmall branch. The problem was acknowledged in R. v. CanadianMarine Drilling Ltd. when Justice Bourassa noted that "the Courtmust be on guard to see that large corporations do not avoidlarge fines or responsibility for their illegal actions byestablishing a network of small corporations." 205 As well inUnited Keno Hill Mines, Justice Stuart took the view that courts"seem prepared to hear evidence of corporate connections orsimply to take judicial notice of such corporaterelationships". 206204. Supra 124 at 86.205. Supra 126 at 10.206. Supra 94 at 50.72B) Corporate BehaviourThe sentencing criterion of corporate behaviour arises inseveral stages; before the violation, after the violation, andduring the court proceedings. The considerations regardingcorporate behaviour before the infraction are closely interwovenwith the level of intent attributed to the company's violation.Evidence of specific efforts to comply and expenses incurredappear to foster a better position on the intent continuum. Forinstance, in United Keno Hills Mines, Justice Stuart stated that"[a] corporation should not be harshly punished if evidenceindicates diligent attempts to comply with governmentregulations." 207 However, it is important that the effort is in"actions, not words", and that the efforts have taken place"before the fact". 208 Evidence of endeavors "after the fact" havegenerally little relevance to the sentencing. 209Although the "after the fact" efforts to comply withlegislation are generally rejected, some other aspects ofcorporate behaviour after the violation are sometimes taken intoconsideration by the sentencing judges. In United Keno HillMines, Justice Stuart talked about "corporate remorse", and notedthat factors considered in assessing a corporation's "remorse"include voluntary reporting of the infraction and the speed andefficiency of corporate action to rectify the problem or clean upthe pollution. 210207. Ibid. at 49.208. R. v. Echo Bay Mines Ltd., supra 135 at 40.209. Ibid. at 41.210. Supra 94 at 49-50.73Voluntary reporting is encouraged as a matter of policy, asmost environmental legislation "depends upon the integrity ofcorporations to provide full disclosure of the impact of theiroperation on the environment". 211 Similarly, the money and timesaved makes courts generally more favourable to an offender whohas pleaded guilty; after all, environmental offences tend to becomplex, time-consuming, and expensive. 212 However, reportingmust be prompt; delayed disclosure has not been viewed aspositively as immediate notification to authorities. 213 Also, ifapprehension and conviction were inevitable a guilty plea shouldnot be regarded as a mitigating factor. 214 Presumably, voluntaryreporting in such situation would have a similar sentencingimpact.As with voluntary reporting, a prompt clean-up and responseto rectify problems are encouraged as a matter of policy. 215Hence, immediate action to clean up and specific efforts toremedy problems as well as cooperation with environmentalofficials are generally viewed favourably by the courts. Forinstance, in Cyprus-Anvil, the maximum fine of $5,000 was reducedto $4,500 on appeal because "the company responded promptly...to211. Ibid. at 49. See also, R. v. Ocelot Industries Ltd., supra180; R. v. Gulf Canada Corp., supra 160.212. R. v. American Can of Canada Ltd. (1977), 2 F.P.R. 121(Ont.Prov.Ct.); R. v. Gulf Canada Corp., ibid.213. R. v. Placer Developments Ltd. (1985), 14 C.E.L.R. 1 at 2(Y.Terr.Ct.).214. R. v. United Keno Hill Mines, supra 94 at 49; R. v. GulfCanada Corp., supra 160; R. v. Canadian Marine Drilling Ltd.,supra 126.215. R. v. United Keno Hill Mines, ibid. at 49; R. v. PlacerDevelopments Ltd., supra 213 at 2.74make the necessary repairs as soon as the spillage wasdiscovered. "216The appearance of corporate officers in the courtproceedings is sometimes regarded as an indication about thesincerity of expressions of regret, and hence serving as amitigating factor. 217 A different approach was adopted inPanarctic, when Justice Bourassa stated that although theappearance of corporate officers bodes well for the defendant "itis only proper that the defendant have a human representativepresent at its sentencing; and this kind of conduct should beexpected. "218 Similarly, in R. v. Northwest Territories PowerCorp., the court regarded the fact that the corporation wasrepresented by its legal secretary as an aggravating factor insentencing. 219C) RecidivismThe traditional concept of recidivism is seen as "especiallyimportant in sentencing corporations" because "recidivisticconduct raises an assumption that the corporation is moreconcerned about profit than compliance."220 The factor isconsidered of particular importance when the company's operationsinvolve "little or no direct contact..with the general public...216. R. v. Cyprus-Anvil Mining Corp., supra 150 at 34. See also,R. v. Canadian Marine Drilling Ltd., supra 126.217. R. v. Tricil, supra 186.218. Supra 124 at 85.219. Supra 114 at 63. See also R. v. Gulf Canada Corp., supra 160at 270.220. R. v. United Keno Hill Mines, supra 94 at 51.75[and therefore the corporation] is probably only peripherallyconcerned about a public image". 221Recidivism is generally regarded as indicating "willfulflouting and ignoring of the laws and the permit requirements",and an "above the law" attitude that needs to be addressed insentencing through heavy fines. 222 Prior convictions have alsobeen used to assail the sincerity of verbal assurances given bythe corporation at the sentencing hearing; in Panarctic Oils,Justice Bourassa noted that the fact that the corporation had twoprior convictions showed that "[t]he corporation's verbalassurances with respect to the environment do not appear to haveworked in the past, they don't appear to have worked in thisparticular situation. "223While recidivism is generally seen as an aggravating factorin sentencing, the fact that a corporation has had no previousenvironmental violations has occasionally reduced thesentence. 224 A different approach was taken in R. v. NorthwestTerritories Power Corp. when the court considered the seriousnessof the offence together with negative public attitude towardspolluters weighing more than the lack of previous convictions. 225221. Ibid. at 52.222. R. v. Panarctic Oils Ltd., supra 124 at 84.223. Ibid.224. See for example, R. v. Oxford Frozen Foods Ltd., supra 134.225. Supra 114 at 60-61.762.2.2.3. Other factors A) Laxity of government officials Although the primary responsibility for complying withenvironmental legislation lies on corporations themselves, it isobvious that government officials have an important role inencouraging or discouraging such compliance. "If the governmentwatchdogs aren't going to get worried, then there doesn't seem tobe a need for the company to get worried. "226 This in mind, thecourts have been reducing sentences as a result of governmentlaxity and incompetence. In United Keno Hill Mines, JusticeStuart pointed out that[i]f the responsible government agency is not pressing compliance,or is actually encouraging non-compliance through tacit orexplicit agreements to permit non-compliant operations, thecorporation cannot be severely faulted. 227A more careful approach was adopted in R. v. Cyprus-Anvil,when Justice O'Connor pointed out that the primary responsibilityfor proper behaviour rests on the corporation, and the governmentofficials' failure to register violations does not diminish thecompany's responsibility. 228 The approach can be justified forpolicy reasons; corporations should not be encouraged to wait forgovernment action to comply with legislation. If legislation isunclear, it is only logical to require the corporation to contactgovernment officials for advice and further information.Prolonged periods of non-compliance can cause severeenvironmental damage, and in such cases the excuse of "not226. R. v. Suncor Inc., May 31, 1983, unreported (Alta Prov.Ct.),quoted in Sentencing in Environmental Cases, supra 127 at 36.227. Supra 94 at 49.228. Supra 150 at 116.77knowing" or "not being told" should not be regarded as amitigating factor. 229 Corporate passivity was taken intoconsideration in R. v. Imperial Oil Ltd. when the corporationrequested the sentence be mitigated on the basis of an"officially induced error of law". The court turned the requestdown on the basis that the company never sought any advice fromgovernment officials and therefore there was no erroneous advicegiven. 230B) The sensitivity of the environmentWith the great potential for harm to the Northern environment,people and businesses operating in the Northern extremes of Canadahave a substantial burden to take precautions to protect thedelicate balance of nature in this remote part of the countrywhich can be so easily damaged and, when once damaged is sodifficult and sometimes impossible to repair. 231It is evident that some areas of the environment are morevulnerable to the effects of pollution than others. In extremenatural conditions where such elements as warmth, water, ornutrients are limited, even a small change in the habitat can befatal. One fragile area that has gained a lot of attention is theCanadian North. The resiliency of the northern environment andits limited capacity to repair the damage was taken intoconsideration in Kenaston when Justice Morrow noted that tundrais "a delicate land, easily damaged and perhaps when once damagedimpossible to repair." 232 Other ecosystems that have beenregarded as requiring special attention include "[a] unique229. See, Sentencing in Environmental Cases, supra 127 at 36-37.230. Supra 180 at 105-08.231. R. v. Le Chene No. 1, supra 158 at 277.232. Supra 146 at 386.78ecological area supporting rare flora and fauna, a high-userecreational watershed, or an essential wildlife habitat".According to Justice Stuart, any injury to such delicateecosystems must be more severely condemned than environmentaldamage to less sensitive areas. 233A more questionable approach to the sensitivity of theenvironment was taken in R. v. Cyanamid Canada Inc., a case inwhich the company was convicted for discharging effluentcontaining ammonia into a river. Since "[t]he particular portionof the...[r]iver where the Cyanamid plant [was] located" was, inthe judge's opinion, "a poor quality fishing area in any eventand not a good sport fishing area because the waters there areprincipally inhabited by catfish", the judge did not want toimpose a severe sanction on the corporation. The application ofthis and other mitigating factors led to a sentence of onedollar. 234C) Political and socioeconomic considerations It is evident that both political and socioeconomic factorshave a significant although not easily identifiable or analyzedinfluence on sentencing. In its decision, the court might beresponding to public pressures which can work both against andfor the offender. "[T]he high profile environmental matters haveachieved in the public eye" 235 may make the courts feel the needto reinforce the credibility of the justice system by imposing a233. R. v. United Keno Hill Mines, supra 94 at 47.234. Supra 181 at 40-41.235. R. v. Northwest Territories Power Corp., supra 114 at 61.79rigorous penalty on a polluter, especially if the trial hasgained plenty of publicity. One obvious example of the influenceof public pressures is the dramatic increase in the size of thefines in the 1980s; maximum fines for environmental offences havegone up from thousands to millions, and also the fines imposedhave grown significantly. 236In spite of the increased concern for the welfare of theenvironment, it is evident that socioeconomic realities continueto work as a downward force in sentencing. The fact thatpollution is a by-product of otherwise legitimate and beneficialbusiness activity means in practice that pollution is "apolitical problem." 237 In sentencing, this can mean optingbetween the financial security of a community or cleanenvironment. Sweigen and Bunt remark that the fact thatenvironmental cases are initiated in the lowest courts can have aremarkable impact on sentencing; when the offender is a prominenttaxpayer in the community or a major employer, socioeconomic andpolitical factors weigh heavier than the need to protect theenvironment. 238 Such factors were eminent in R. v. CyanamidCanada Inc. when the court ruled that correcting the operationand installing proper equipment "would have created a tremendousfinancial burden upon the accused...and... may have required thatthe Cyanamid factory be shut down and that many jobs be lost". 239236. See Saxe, supra 89.237. R. v. Greater Vancouver Reginional District and GreaterVancouver Sewerage and Drainage District (1981), 10 C.E.L.R. 157(summary).238. See, Sentencing in Environmental Cases, supra 127 at 26.239. Supra 181 at 40.80It appears that economic and political factors are onlyseldom explicitly expressed in sentencing. More often suchconsiderations are hidden under such criteria as the "goodcorporate citizen" character of the offender, or the difficultyor high cost of alternative technology, both of which are used asmitigating factors in sentencing. 240Similar issues of conflicting values come up when thecorporation pleads technical or economic difficulties in theprevention of pollution. A good summary of the problem was madeby Justice Paradis in R. v. North Vancouver when he noted thatthe cost [of alternative technology] are high indeed. But whetheror not they are "prohibitive" depends on the value society asawhole is prepared to place, in the long view, on the preservationof a resource. 241It would seem reasonable to presume that if a companychooses to run an operation that is potentially dangerous, itshould assume responsibility to minimize the hazards at whatevercost. Quoting Justice Dnieper in R. v. Nacan Products Ltd.:[o]ur society, of course, needs the manufacturer of products madeby like corporations and enterprises, yet such manufacturingcannot be done at the expense of others. The responsibility must lie upon the manufacturer to ensure that others do not pay theprice of such enterprise [emphasis added]. 242The approach consistent with this route of thinking was taken inR. v. Echo Bay Mines Ltd., when the court ruled that "the mostaggravating factor against the...defendant is that measures which240. R. v. Giant Yellowknife Mines Ltd. (1975), 4 C.E.L.R. 69.;R. v. Canada Cellulose Co. [1979] B.C.D. Crim. Sent. 7225-01(B.C.Cty.Ct.); Echo Bay Mines Ltd., supra 135.241. Supra 115 at 171.242. Oct. 13, 1982, unreported (Ont.Prov.Ct.), quoted inSentencing in Environmental Cases, supra 127 at 40.81could have been taken...were relatively inexpensive andsimple. 112432.2.3. Sentencing Options2.2.3.1. The fineThe only penal sanction permitted for most environmentaloffences is the fine. The popularity of the fine is based on theinducement that criminal corporate behaviour is essentiallyprofit-motivated and can thus be prevented by aiming the sentenceat the pocketbook. However, up until the second half of the1980s, fines had generally been too small to have any real effecton corporate behaviour. On the contrary, they have been more ofan "invitation to gamble". Fines of a couple of hundred dollarsor even less (one dollar in R. v. Cyanamid Canada Inc. in1981! 244 ) were more of a rule than an exception in the 1970s, andsince other alternatives were almost nonexistent, the penaltieswere generally mere tokens to corporate polluters.The situation started to change in the 1980s; since thenthere has been a clear upward revision in the size of the finesattached to environmental offences. While the typical maximumfine was ten thousand dollars in 1970, today the maximum penaltycan be in six or even seven figures. For example, a person (anindividual or a corporation) who causes or permits an oil and gasspill contrary to the federal Oil and Gas Production andConservation Act is liable to a fine of up to one million dollars243. Supra 135 at 40.244. Supra 181.82a day. 245 Fines of corresponding caliber are available pursuantto section 113 of the CEPA. Another federal statute, theFisheries Act, provides for fines of one hundred thousand dollars ,a day. On the provincial level, the Ontario EnvironmentalProtection Act provides for fines up to one hundred thousanddollars for repeat offences, and Manitoba Environment Act has aspecial two hundred thousand dollar fine reserved for repeatoffences committed by corporations while a corresponding fine foran individual is only ten thousand dollars.Although the fines imposed have generally not increasedproportionately to the increase in maximum fines, it has becomecommon to impose fines of five or even six figures. There areseveral reasons, in addition to higher maxima, for thisdevelopment. One important factor is the judicial acceptance ofdaily fines; courts have increasingly imposed a separate fine foreach day on which an offence occurs or continues. For instance,in R. v. Jack Cewe Ltd. the company was fined twenty thousanddollars for each of seven days on which its effluent wasdischarged to a river, for a total of one hundred and fortythousand dollars. 246 Since environmental offences often takeplace on several successive days, the fines can be quitesignificant. The question of the reasonableness of such fines wasresolved in R. v. Bocskei when the court ruled that "whenconsecutive sentences are imposed the final duty of the sentenceris to make sure that the totality of the consecutive sentences is245. Supra 22.246. (1983), 3 F.P.R. 472 (B.C.Co.Ct.). See Saxe, supra 89 at108-09.83not excessive." 247 However, in Panarctic Oils, the court decidedthat this so called totality principle has only a very limitedapplication in environmental cases because "the provision fordeemed offences for each day of continuing offence is thelegislative way of reflecting to [sic] gravity of the offencecontemplated in terms of sanction", and therefore applying thetotality principle would be "to ignore the impact that the law isdesigned to make on offenders. "248Another reason for more severe penalties lies in theincreased application of contempt of court to environmentalcases. Municipal by-laws as well as some of the recentenvironmental statutes give the court the power to make ordersprohibiting pollution or orders to take positive steps to restorethe environment. 249 If the defendant defies the order, the courtcan charge him for contempt of court. High fines to corporationsand jail terms to corporate executives have been imposed as aresult of such charges. In R. v. Jetco Manufacturing Ltd. thecorporation was fined two hundred thousand dollars and a jailterm was imposed on the corporate president. 25° Similar sentenceswere delivered in R. v. B.E.S.T. Plating Shoppe Ltd. in the sameyear. 251247. (1970), 54 Cr.App.R. 519 at 521.248. Supra 124 at 88.249. Saxe, supra 89 at 111-12. See for example, CEPA, supra 13,s. 130(1)(a)-(b); Fisheries Act, supra 14, s. 79.2(a)-(b);OntarioEnvironmental Protection Act, supra 22, s. 146d(1).250. (1986), 1 C.E.L.R. (N.S.) 79 (Ont.S.C.), rev'd. on othergrounds (1987), 1 C.E.L.R. (N.S.) 243 (Ont.C.A.).251. Supra 90. See also, Metropolitan Toronto v. Siapas, supra90; R. v. Blackbird Holdings Ltd., supra 146.84Unlike an individual offender, a corporation cannot bejailed for defaults in fine payments. An alternative measure isintroduced in the Ontario Provincial Offences Act, according to ,which, if fines are not paid, the Provincial Offences Court isempowered to suspend and prohibit the issuance of licences,permits and approval issued by the Ministry until the fines arecollected. They include certificates of approval to operate wastehauling and waste disposal businesses under the EnvironmentalProtection Act, permits for taking groundwater under the WaterResources Act, and licences to carry on business as anexterminator under the Pesticides Act. 252The main argument for higher fines is that since rationalcorporate decision-making is based on calculating costs andbenefits, high fines produce a disincentive to engage inmisconduct, and "[i]t must be cheaper to comply." 253 The argumentappears somewhat dubious in light of case law. For example, in R.v. Canadian Marine Drilling Ltd., the company had spent betweensixty and ninety thousand dollars a month per barge for storingwaste oil. The company was convicted under the Fisheries Act whenone of the barges almost sunk resulting in an escape of oil. Thefine imposed was thirty thousand dollars. 254 When compared to thecost of storage, it is easy to see that the cost of complying ismuch higher than paying for the fine. 255252. Ontario Environmental Protection Act, supra 22, s. 146e(1).253. R. v. Gulf Canada Corp., supra 160 at 271.254. Supra 126.255. Judge R. Michel Bourassa, "Sentencing in EnvironmentalCases: A View from the Bench" in Environmental Enforcement, supra82, 100 at 101.85Although the fine is still by far the most common penalty isenvironmental offences, the number of alternative sanctions isincreasing. These alternative sanctions can be divided roughly inthree groups, namely publicity, sanctions providing redress, andforfeiture. The sanctions and their use in environmental caseswill be looked in more detail next. PublicityBrent Fisse has divided publicity into formal and informalpublicity. Informal publicity is left to the discretion of themass media while formal publicity is advocated by an officialagency upon the imposition of a sanction by a court. 256 Whileinformal publicity is almost always an inevitable result ofsentencing, especially so in criminal cases, the use of publicityas an official sanction has been rare in Canada. 257 However, somerecent legislative developments seem to indicate increasedinterest in the sanction; pursuant to section 130(1) of the CEPAthe court can, in addition to any other punishment, direct theoffender to publish the facts relating to the conviction. If theoffender fails to comply, section 130(2) empowers the Minister ofEnvironment to publish the facts and recover the cost ofpublication from the offender.256. Brent Fisse, The Use of Publicity As a Criminal SanctionAgainst Business Corporations. (1971) 8 Melbourne University LawReview 107.257. The effect of informal publicity was recognized in R. v.Placer Development Ltd., supra 161 at 61, when Justice DeWeerdtnoted that the fine was a mere "token" and that "the real penaltymust rest in the fact that the respondent now has a conviction onits record."86A similar type of publicity order is provided in section79.2(c) of the federal Fisheries Act. The provision empowers thecourt, in addition to any punishment imposed, to order theoffender to publish the facts relating to the offence. 258 It isimportant to notice that in spite of superficial similarity, theCEPA provision differs from its counterpart in the Fisheries Actin one significant aspect; the words "in addition to any otherpunishment" in CEPA reveal that the sanction can have penalimplications while the Fisheries Act provision "in addition toany punishment" does not authorize imposition of a punitivesanction. R. v. Northwest Territories Power Corp. illustrates thequestion; in the decision, the Northwest Territories TerritorialCourt employed (the former) section 41(2) of the FisheriesAct. 259 The section allows courts, in addition to any punishment,to order an offender to refrain from doing certain acts or totake specified action to prevent further offences. TheTerritorial Court applied the section and ordered the directorsand chief executive officer of the corporation to publish anapology to the public for the defendant's negligence. It wasnoted in the decision thats. 41(2) should be utilized so as to teach the directors of thecorporation to increase their sense of responsibility and inducechanges in the corporation's policies, priorities, and values, andthereby help prevent commission of a further offence. 26258. Supra 14 (as am. S.C. 1991, c. 1).259. At the time of the trial, Fisheries Act did not contain thepresent publicity section 79.2(c), but only a general sectionproviding for remedial orders (s. 41(2)).260. Supra 114 at 58.87Justice Bourassa pointed out that "a public apology carries withit a degree of publicity which may also act as a deterrent. "261The order was, however, overruled on appeal by theTerritorial Supreme Court. The Supreme Court ruled that aninvoluntarily given, judicially-coerced apology is a punishment,and orders given under the Fisheries Act may not have punitiveimplications because section 41(2) only authorizes orders inaddition to anv punishment. The Court also referred to thepublicity section of the CEPA and ruled that although the CEPAallows the use of publicity as a punishment, an apology goesbeyond what the statute authorizes because a judicially coercedapology is contrary to the principles of sentencing recognized bythe Canadian courts, and may well be contrary to the principlesof fundamental justice declared in section 7 of the Charter ofRights. 262 In short, the ruling appears to mean that thepublicity provision of the Fisheries Act, or other similar typeof provisions, cannot be used for giving publicity orders withpenal implications, and when employing section 130(1) of theCEPA, publicity may not be in the form of an apology. Redress As mentioned earlier in this paper, the Canadian SentencingCommission resisted casting the concept of sanctions exclusivelyin terms of "punishment". The purpose of this section is to lookat sanctions that are better described as "obligations" than261. Ibid. at 66.262. Ibid.88"punishments" in the traditional sense. The sanctions discussedhere cover the compensatory and remedial measures provided by thepenal provisions of environmental statutes or the Criminal Code.The victim orientated approach to sentencing hasconcentrated on human victims of crime. Yet, in environmentaloffences it is often impossible to pinpoint the individualsufferers. Harm is done to the "common good", "common heritage ofmankind", or "the environment itself", depending on the speaker'sperspective. Therefore, the following presentation is dividedinto two parts; the first part is devoted to restitution andcompensation for human victims while the second part concentrateson remedial orders for "victimless" offences. 263A) Restitution and compensation Restitution and compensation orders are rare exceptions inthe present environmental statutes. One of the few provisionsproviding for compensation is section 131(1) of CEPA, whichprovides compensation for the loss of property. Conditions forcompensation are the conviction of the offender and applicationfor compensation from the person aggrieved. Also the 1987Manitoba Environment Act empowers courts to order the offender topay damages or make restitution. Neither one of the provisionscan be used independently but only in addition to a penalty. 264263. In this thesis, "restitution" means the performance ofspecified services for the victim while "compensation" is usedfor monetary payments. It should be noted, however, that theterms are often used interchangabily, and there remains a certainambiguity about the definitions.264. Supra 22, s. 36(c).89In the sentencing practice the courts have been reluctant toimpose restitution or compensation to crime victims. The basicobjection is that the criminal courts are ill-equipped to dealwith difficult monetary questions involved in compensation andrestitution. It is also feared that compensatory claims wouldunduly lengthen the trials, and that the courts would turn intosome kind of "collection agencies". 265B) Remedial orders Section 130(1)(b) of the CEPA empowers the court to directthe offender to take specified action to remedy or prevent harmto the environment resulting from the offence. The ManitobaEnvironmental Act empowers the court to order convicted pollutersto take action to clean up or restore the environmentaldamage. 266 Remedial type orders can also be given under section79.2 of the Fisheries Act. The provision has been used for givingorders to perform repair and maintenance work to the damagedsalmon spawning grounds, 267 and to prepare a clean-up plan forcontaminated property. 268 Other suggested uses of the sectioncould include clean-up or re-stocking a body of water with fish.In addition to direct reparative actions, remedial orderscan also be used for preventing further violations andenvironmental misconduct. In R. v. Placer Developments Ltd. (the265. Sentencing in Environmental Cases, supra 127 at 69.266. Similar provisions can be found also in the Ontario WaterResources Act, Ontario Pesticides Act, and Ontario EnvironmentalProtection Act.267. R. v. Jackson Bros. Logging Co., [1984] 4 W.W.R. 563.268. Shamrock Chemicals Ltd. v. The Queen (1989), 4 C.E.L.R.(N.S.) 315 (Ont.Distr.Ct.).90former) section 33(7) of the Fisheries Act was used for orderingthe company to prepare a manual covering the common environmentalproblems in northern mineral explorations. 269 The same provisionwas used in R. v. Robinsons' Trucking Ltd. when the company wasordered to equip all of its tankers with equipment designed toprevent future ecological mishaps, and to designate an on-scenecommander to supervise future oil spills as well as to designateand train an environmental response team. 270 In R. v. OxfordFrozen Foods Ltd., the court ordered the offender to put in placea waste management strategy for upgrading its waste treatment andhandling systems. It is interesting to notice that in thedecision, the court took the cost of the remedial order intoconsideration when assessing the size of a fine. 271Both compensation and remedial orders can also be imposed aspart of a probation order. In present legislation, a probationorder can be imposed only under section 737 of the CriminalCode. 272 The section provides the court with the power to suspendthe passing of sentence, and direct that an offender be releasedupon the conditions prescribed in a probation order. 273 The ordermay include a condition relating to compensation and reparation269. Supra 213.270. Supra 190.271. Supra 134.272. The Code applies to federal environmental statutes, and theprobation order has also been incorporated to some provincialsummary conviction procedure legislations. For example, accordingto Saskatchewan Summary Offences Procedure Act, R.S.S. 1978, c.S-63, Code probation orders can be made in provincialenvironmental offences.273. It is important to notice that it is the passing of sentencethat is suspended rather than the execution of a sentence thathas already been imposed. See, R. Paul Nadin-Davis, Sentencing inCanada. (Toronto: Carswell Company Ltd., 1982).91for any actual loss or damage inflicted as a consequence of thecommission of an offence.Every probation order is deemed by section 737(2) of theCriminal Code to contain a condition that the accused "shall keepthe peace and be of good behaviour." The court may also imposeother reasonable conditions it considers desirable to secure thegood conduct of the defendant or prevent him from committingfurther offences. The objective must be the securing of law-abiding conduct, not punishment, and therefore provisionauthorizes only such measures that are not punitive by nature. 274The measure must be aimed at deterring the accused, not others,and it must be reasonable. 275The Canadian courts seem to disagree over the questionwhether a corporation can be put on probation or not. InPanarctic Oils, the Territorial Court of the NorthwestTerritories applied the Code probation provision to the offence,and put Panarctic Oils on probation for a period of two years.The terms of the probation were that the corporation "be of goodbehaviour and not breach the peace", and that the corporationmust file with the court a detailed written policy for correctingthe situation that led to the offences. 276 The decision was aradical departure from an earlier ruling in R. v. Algoma SteelCorp. in which the Ontario Provincial Court held that a suspendedsentence and probation order were inapplicable to a corporation274. R. v. Ziatas (1973), 13 C.C.C.(2d) 287 (Ont.C.A.).275. Sentencing in Environmental Cases, supra 127 at 62-63.276. Supra 124 at 95.92both under the Criminal Code and provincial legislation. 277However, in spite of the successful application of probation inPanarctic Oils, the courts still appear reluctant to put acorporation on probation. In a 1989 decision of R. v. Gulf CanadaCorp., the court ruled that the negative attitude of theNorthwest Territories Appeal Court toward probation forced thecourt to rely on fines although probation would have been a moreappropriate sanction. 2782.2.3.4. ForfeitureBlack's Law Dictionary defines forfeiture as "the losing ofsomething by way of penalty". 279 This little used sanction can bedivided into two categories; forfeiture of profits which is aimedat depriving the offender from gains or savings derived fromillegal conduct, and forfeiture of property, the purpose of whichis to remove an object or property used in committing the offenceor resulting from the offence of the offender.Forfeiting profits or "the fruits of the crime" is the morecommonly used of the two. The normal procedure is that instead ofissuing a special order of forfeiture, the profit is taken intoconsideration when assessing the size of a fine. A typicalstatement of a court is that "the Court must do its best to seeto it that the fine is of sufficient quantum to take away anyprofit earned". 280 Some of the environmental statutes also277. R. v. Algoma Steel Corp., Jan. 10, 1977, unreported(Ont.Prov.Ct.), summarized in (1977), 1 W.C.B. 118.278. R. v. Gulf Canada Corp., supra 160.279. Black's Law Dictionary, supra 9, at 778.280. R. v. Browning Arms Company of Canada, supra 130 at 300.93provide a possibility to order a so called "additional fine".When the economic benefit from breaking the law exceeds themaximum fine, the court may impose an additional penaltyequivalent to the monetary benefit received as a result ofcommitting an offence. Besides CEPA (section 129), at least theFisheries Act, 281 the Manitoba Environment Act, 282 OntarioEnvironmental Protection Act, 283 and B.C. Waste Management Act 284provide for the fine.Forfeiture of profits requires evidence on the savings orgains derived from the offence. The courts are faced with somedifficult evidentiary questions; for one thing, it can be veryproblematic to prove causality between pollution and profit.Moreover, assessing the quantum of gains with any degree ofaccuracy is often almost impossible. A solution to these problemswas suggested in United Keno Hill Mines, when Justice Stuart tookthe position that the onus lies on the corporation since it isprivy to the necessary information. If the corporation did notprovide the information, a reasonable Crown estimate wouldsuffice. Another way to gather evidence would be to let courtshear complying competitors on the extent of economic benefits theoffender derived from non-compliance. 285Forfeiture of property is rare in environmental legislation.Only the Fisheries Act contains a general provision aboutforfeiture. According to section 72(1) of the Act,281. Supra 14, s. 79 (as. am. 1991, c. 1, s. 24).282. Supra 22, s. 36(d).283. Supra 22, s. 146(c) (as am. S.O. 1986, c. 68, s. 15).284. Supra 51, s. 34(1).285. Supra 94 at 51.94"the court may, in addition to any punishment imposed, order thatany thing seized under this Act by means of or in relation towhich the offence was committed, or any proceeds realized from itsdisposition, be forfeited to Her Majesty."286Section 47(b) of the Ontario Environmental Protection Actprovides that when a person is convicted of an offence in respectof hauled liquid industrial waste or hazardous waste, the courtcan order suspension of permit and detention of number plates ofthe vehicle used in the commission of the offence. The ordercannot be used independently but only in addition to any otherpenalty. Also, section 47(c) provides for an order to detainpermit and plates until the fine imposed on the offender ispaid. 287Licences and permits to operate can be viewed as property ofthe corporation. When they are used against regulations andorders, they become property used in commission of the offence.Revocation of licences and permits could therefore be regarded asa type of property forfeiture. Such provision can be found in theManitoba Environment Act. According to section 33(2) where, inthe opinion of the judge, the corporation is unwilling or unableto remedy the situation, the judge may suspend or revoke all orpart of the environmental licences, or permits for such time asthe judge sees fit. The sanction can be used only in addition toany penalty. The Ontario Provincial Offences Act makes aprovision for this remedy in default of payment of fines. Asimilar type of provision is also provided in section 79.1 of theFisheries Act. According to the section, a lease or a licence can286. Supra 14 as am.287. Supra 22 (as en. S.O. 1988, c. 54, s. 25(1)).95be cancelled or suspended or its renewal can be prohibited forany time the judge deems appropriate.3. THE FINNISH LAW PROPOSAL ON THE CRIMINAL LIABILITY OFCORPORATE BODIESTraditionally, corporate criminal liability has not beenaccepted as a general principle in civil law systems. The Finnishlegal system has followed this tradition with the present FinnishPenal Code (39/1889) not recognizing the possibility of punishinga corporation. 288 However, with changing economic and socialstructures, pressures to adopt criminal corporate liability haveincreased. Principles that worked adequately in an agriculturalsociety with simple organizational structures no longer meet the288. The term "punishing" in this context means the imposition ofgeneral Finnish penalties of imprisonment, the fine and the pettyfine. In Finnish criminal law, penal sanctions are divided intotwo sub-categories: actual penalties or punishments and so calledsupplementary sanctions or "side-sanctions". The most importantforms of supplementary sanctions are various forms of forfeiture,compensation, and withdrawal of driver's licence. They are notcoercive in the same manner the penalties are, but their functionis to protect society from recurrences of the crime byincapacitating the means to commit further offences, and to paydamages for the victims of the crime. The supplementary sanctionsare discussed in more detail in section under theheading "Sanctioning a Corporation". See generally, TarjaPellinen, "The Finnish System of Penal Sanctions and Its Reform"in Towards a Total Reform of Finnish Criminal Law. (Publicationsof the Department of Criminal Law and Judicial Procedure B:2.University of Helsinki, 1990), at 159. See also, Markku Halinen -Pekka Koskinen - Tapio Lappi-Seppala - Martti Majanen - HarriPalmen - Per Ole Trdskman - Terttu Utriainen, Rikostenseuraamukset ("Penal Sanctions": a textbook). Helsinki:Lainopillisen Ylioppilastiedekunnan Kustannustoimikunta, 1981),at 1-6 and 177-204.96standards of a highly developed, industrial society. Traditionallegal control strategies are regarded as not having the requiredeffect on trade and industrial enterprises. Public authoritieshave responded to the inadequacies of the present situation byintroducing a proposal on corporate criminal liability.The dialogue on corporate criminal liability has been goingon for nearly 20 years. The idea was first introduced in severalcommittee reports, and finally, in 1987, legal history was madewhen the Penal Code Task Force published a proposal on the"Criminal Liability of Corporate Bodies". The proposal advocatesthat Chapter 9 of the revised Penal Code is to be devoted tocorporate criminal liability. 289The purpose of this chapter is to examine some of thereasons and background for the proposal, and introduce theconcept of criminal corporate liability as it is seen by theFinnish legislator. The chapter is divided into three parts. Thefirst part gives the reader some background to the topic bydiscussing the historical development of criminal liability, andsurveying the present practices and present means of controllingcorporate behaviour. Justifications for the development ofcorporate criminal liability are also shortly discussed. Thesecond part of the chapter is devoted to the law proposal oncorporate criminal liability. In the first section, the lawproposal is discussed in the light of the Penal Code Reform whilethe second section is dedicated to scrutinizing the theoretical289. OikeushenkilEin rangaistusvastuu, supra 24. For an unofficialtranslation of the proposal see appendix.97framework of the Finnish approach to corporate criminalliability. Since sentencing is, for the most part, governed bygeneral criminal law principles, corporate sentencing isdiscussed separately in the third part of the chapter. A surveyto general sentencing principles is followed by an introductionto the corporate fine, sentencing criteria, and waiving ofmeasures.3.1. Background3.1.1. The Penal Code and Individual LiabilityThe Finnish Penal Code was passed at the end of the lastcentury (1889) when Finland was an agricultural society. Theindustrial era had not yet reached Finland where organizationalstructures were simple, and the few existing companies were smallone-person proprietorships. Companies could be directlyidentified with their owners making it easy to find the person orpersons responsible. Consequently, there was no need to penalizecorporate entities separately from their owners. Also, the end ofthe last century was characterized by a strong sense ofindividualism resulting in an increased reluctance to punishcollective entities. As a result, the fundamental principle ofthe 1889 Penal Code was that only a human being can be punishedunder the criminal law. This principle still prevails, and98accordingly, the present penalties of imprisonment, the fine andthe petty fine can only be imposed on an individual offender. 29°3.1.2. The Present Practice of Controlling CorporationsAlthough Finnish law does not presently recognize thepossibility of punishing a corporate entity, corporations can bereached by a variety of other means. Corporations are by no meansabove the law, not even criminal law. For one thing, corporationsmay be subject to forfeiture and payment of damages. Secondly,several forms of administrative orders can be imposed on them.Corporations may also become indirectly punished through theprosecution of their individual members such as executiveofficers and employees.Corporate activities are regulated either directly orindirectly by several statutes, such as the Company Act (734/78),Cooperative Banks Act (247/54), Associations Act (503/89),Bookkeeping Act (904/85), and Small Business Act (88/389). Thestatutes lay particular emphasis on the responsibility of theboard of governors or a corresponding body to secure that thecompany is operated according to laws and regulations. Some ofthese statutes include a criminal provision which makes a290. In Finland, so called general penalties are imprisonment,the fine and the petty fine (chapter 2, section 1 of the PenalCode). A sentence of imprisonment may be imposed either for adeterminate period (at least 14 days and at most 12 years) or forlife. The fine is imposed as day-fines. The smallest fine is oneday-fine, and the largest is 120 day-fines. The size of each day-fine depends on the financial situation of the offender. Thepetty fine is a monetary penalty that is set at a fixed amountfor petty traffic offences. Besides general penalties, theFinnish Penal Code includes special penalties for civil servantsand soldiers.99violation of the statute punishable by criminal prosecution.However, only individuals working or acting for the corporationcan be prosecuted and convicted for these violations. Usually thepenalty is meted out to those individuals who have acted in anauthoritative position on behalf of, and in the name of thecorporation.In the following, some of the sanctions available againstcorporations are introduced together with the basic principlesconcerning the division of responsibility inside a corporation. Sanctioning a corporationAlthough no actual penalties can be imposed on a corporatebody, courts may impose various so called supplementary sanctionson corporations. The most important of these are compensation fordamages and various forms of forfeiture.An order to pay damages can be made in addition to a penaltyas a part of the criminal procedure, or it can be used alone as acivil sanction. Making a civil claim in criminal proceedingsmeans the proceedings are "adhesive". In such proceedings, themain proceeding is criminal, but at the discretion of the court,the complainant is allowed to present his compensation claimduring the procedure if the claim is based on the criminal act inquestion. The court will thereupon decide on both the criminaland civil issue at the same time. However, if the compensation100claim would considerably prolong the process, the court candivert the civil claim to a separate civil proceedings. 291The most important provisions on compensation are in theCivil Liability Act (412/74). According to the Act, under certaincircumstances, an employer or a public corporation has avicarious liability for the acts of agents or employees acting inthe course of their employment. 292 Section 2:1 of the Actexpresses the general civil law principle of fault. Thisprinciple, unlike the principle of guilt in criminal law, appliesalso to corporations. Liability is restricted to compensation forpersonal damages, damages to property, and, to certain extent,economic damages. 293 The Act on Compensation for Crime Damagesfrom State Funds (73/935) provides a state compensation schemefor criminal injuries. Under the Act, human crime victims have aright to collect damages for personal injury and loss of income291. For more information see, Matti Joutsen, The Role of theVictim of Crime in European Criminal Justice Systems. (Helsinki:Helsinki Institute for Crime Prevention and Control, 1987).292. An employer is liable for damage caused by her employee oragent only insofar as he has been negligent himself. As a rule,this is the case where she has failed to give the employee dueinstructions, or has not shown due care in choosing orsupervising the employee. The burden of proof is on the employer.Absolute liability exists in certain cases where the dangerousnature of the activities justifies such liability. For instance,owners and operators of electricity and nuclear plants haveabsolute liability.293. According to the Act, "one who wilfully or negligentlycauses damage to another is liable for damages". Negligence or"tuottamus" in Finnish civil law has a different meaning fromthat in criminal law. The borderline between the two is somewhatvague with the basic difference lying in intent (dolus). Inshort, civil law negligence starts from where criminal lawnegligence ends. Civil law negligence can be mere carelessness orthoughtlessness, "guilty mind" or malice is not required. Seegenerally, Brynolf Honkasalo, Suomen rikosoikeus II, yleisetopit. ("Finnish Criminal Justice System II", general part),Helsinki 1967, at 75-76.101from the government, which, in turn, has a right of recourseagainst the offender. 294The second supplementary sanction that can be used againstcorporations is forfeiture. The most important forms offorfeiture with regard to environmental offences are forfeitureof profits (scelere quaesitum) and forfeiture of an instrument orproperty used in committing the offence (instrumentumsceleris). 295 According to section 2:16 of the Penal Code, thefinancial benefit of the offence to the offender, or to whom he is acting for or on behalf of, must be forfeited. The forfeituretakes place regardless of whether charges have been raisedagainst the party for whom the offender has been acting. Sincethe provision includes the benefactor of the crime, it can beused against corporations. While the actual offender can only bea human being, the benefactor can be any kind of entity. Also,according to the same provision, an instrument or property whichwas used in committing the offence belonging to the offender, orto the party for whom or on behalf of whom he has been acting,can be forfeited. In addition to these two general provisions,294. In 1990, the Commission on Environmental Damages prepared alaw proposal for an Act on Civil Liability for EnvironmentalDamages. If passed, the proposed law would significantly improvethe position of claimants. See, Jukka Simila, For a CivilLiability Act: A Proposal. (1991) 21 Environmental Policy and Law72295. Other forms of forfeiture that appear in Finnish criminallaw are forfeiture of the product of the crime (productumsceleris), and forfeiture of the crime object (corpus delicti),such as smuggled goods. If the instrument or property cannot beforfeited, its estimated value can generally be forfeitedinstead. See Halinen - Koskinen etc., supra 288, at 177-87.102some statutes have their own specific provisions aboutforfeiture. 296In Finnish criminal law, forfeiture is an essential part ofsentencing. This is particularly so with the forfeiture ofprofits which is always obligatory. 297 Determining the amount ofprofit is, however, left to the discretion of the court. Inprinciple, all the profit must be forfeited, but in practice, thecourts generally base their decision on the defendant'sadmission. As a result, forfeiture orders are often quitelenient. 298Defining the term profit and estimating its amount areregarded as the biggest obstacles for efficient use offorfeiture. The Finnish Environmental Offences Committeerecommended drafting guidelines, and The Criminal Law Committeesuggested the courts use experts in calculating profit. 299Unlike the forfeiture of profits, forfeiture of property isnot obligatory but is left to the discretion of courts. Its useis further limited by the fact that in the sentencing practice,forfeiture of property has generally been applied only to296. For instance, the Private Forests Act provides that treescut without a permission or their value must be forfeited to theDistrict Forestry Board which then must use the funds forreforestation on the area in question.297. However, the complainant's right to damages always precedesforfeiture.298. Halinen - Koskinen, etc., supra 288, at 182. The FinnishSupreme Court decision KKO 1983 II 170 presents a good example ofa lenient forfeiture. In the case, the prosecutor demanded aforfeiture of 300,000 FMK but the Water Court order a forfeitureof 100,000 FMK. The Supreme Court upheld the Water Court'sdecision.299. The Environmental Offences Committee Report, 1973:49; TheCriminal Law Committee Report, 1976:72 at 91.103intentional crimes. In environmental offences, propertyforfeiture is also hindered by some practical problems; for onething, identifying the particular instrument or property is oftendifficult and once identified, forfeiting such "instruments" asthe whole factory that has been used in the violation is hardlyrational. Also, if the truck that has been used in the hauling ofillegal waste is essential to the livelihood of the defendant,forfeiture might cause unreasonable hardship. For these reasons,forfeiture of property has remained rare in environmental cases.In addition to supplementary sanctions of compensation andforfeiture, some coercive measures, such as search and seizure,can also be used against corporations. As well, mostadministrative orders can be imposed on corporations. Logging orbuilding prohibitions, reparation orders, or suspension of workon construction site are examples of such orders.So called conditional imposition of the fine is anotherimportant measure in controlling corporate activities. Thesanction is administrative by nature and its imposition consistsof two parts; first, if a violation of a law has happened,administrative officials impose the conditional fine on theviolator. If the violator changes his behavior, the fine isdropped. If he continues the violation, the fine becomes anunconditional penalty imposed by a court. The conditional fine isnot a general sanction, but can be imposed only when a statutespecifically provides for it, as in the Extractable LandResources Act (555/81), Air Protection Act (67/82), or Planningand Construction Act (370/58).1043.1.2.2. Attributing liability within a corporationSince a corporation as such cannot be made criminally liablefor its actions, the liability lies on the individuals working inor for the corporation. However, finding the right persons isoften difficult due to complex corporate structures anddelegation of authority. Since only a few of the presentenvironmental statutes specifically attribute the liability to acertain person, the courts have been forced to look elsewhere forguidance. 3 " The starting point is the criminal law principlethat the person whose conduct constitutes a crime is liable forthe offence. 301 With intentional offences, this principle can besupplemented by the rules of participation provided in chapter 5of the Code. In legal practice, the courts have also putsignificant importance on internal regulations and instructions,and job descriptions in employment contracts. Another importantfactor is the actual prospects of the accused to influence thedecision-making process; the further down on the corporate-ladder300. For instance, some log-floating offences provided in chapter13 of the Water Act (1961/264) are attributed to the members ofthe board of governors of the log-floating association and to thelog-floating foreman.301. According to Finnish criminal law doctrine, crime is "animputable, wrongful act that fulfills the definitional elementsprescribed by the law." Thus, the basic requirements for criminalliability can be represented in three steps:1) the act must fulfill the definitional elements prescribed bythe law,2) the act must be wrongful, and3) the actor must display the required culpability.See, Tapio Lappi-Seppala, The Doctrine of Criminal Liability andthe Draft Criminal Code for Finland. International ResearchColloquium on the Centenary of the Finnish Penal Code - 100 Yearsof the Finnish Penal Code, September 24-27, 1990, University ofHelsinki, Finland, a preliminary version, at 3-4. See also,Brynolf Honkasalo, Suomen rikosoikeus I, yleiset opit. ("FinnishCriminal Justice System", general part.), Helsinki 1965, at 19.105an employer stands, the more limited his authority normally is.Also, it appears to be general practice that if the actor cannotbe identified, the courts use, the managing director as theirfavorite scapegoat. 302The legal practice is strongly based on in casu decisions;thus, decisions depend on the details of each particular case.The rules on attributing liability are complex and ambivalent,and finding the liable person appears almost random. Often thecourts do not even give reasons for singling out a certainindividual. This ambivalent situation has encouraged formulationof more specific and unified rules on attributing liability. Forexample, the proposed chapter 48 to the revised Penal Code onEnvironmental Offences includes a provision on "Apportionment ofLiability". According to the provision, in the assessment ofliability,consideration shall be paid to the nature, extent and clarity ofthe functions and authority of the person in question, hisprofessional competence and also in other respects his complicityin the origins or continuation of the unlawful state. 3033.1.3. Justifications for Corporate Criminal LiabilityAfter the Second World War, Finland developed into a highlydeveloped, industrial nation with complex organizationalstructures. A dominant force behind this development arecorporations which have grown vastly in size and influence from302. The Environmental Offences Committee Report, supra 299 at91.303. Translation from Finnish Criminal Code Reform: Law Texts andDrafts. International Research Colloquium on the Centennary ofthe Finnish Penal Code - 100 Years of the Finnish Penal Code,September 24-27, 1990, University of Helsinki, Finland, at 46.106small proprietorships to complex, national or multinational powerstructures.The changed socioeconomic situation of the corporation hasbrought about two paramount reasons for introducing corporatecriminal liability. First of all, individual liability is nolonger regarded as sufficient in influencing decision-making inlarge corporations. The people inside a company have turned fromindependent decision-makers into mere components of the companymachinery making the identification of corporate practice withcertain individuals either impossible or irrational. Also,sanctions available to individual offenders are not in justproportion to serious offences committed in corporate operations.Secondly, since corporate practices are often a result ofinteraction between several individuals and groups, the conceptof structural, collective guilt has become a reality that must betaken into account in the criminal justice system. In thecorporate decision making process, a violation is often caused bydefective company policies which are a result of contributionsmade by several people on different levels of corporatestructure. In such cases, penalizing the corporation instead ofindividuals enables comprehensive evaluation of theorganizational behaviour that led to the commission of anoffence. Also, cumulative guilt can be made up of such smallindividual contributions that holding these people individuallyresponsible is not possible while imposing liability on thecorporate entity would enable just distribution of denouncementover all involved persons.107A further stimulus towards the formulation of corporatecriminal liability has been the public's perception of corporatecriminality. Today's public regards corporations as entities witha definite identity who are capable of considering risks andconsequences. Consequently, penalizing corporations has become agenerally accepted and even anticipated concept among thepublic. 3043.1.4. Development of Chapter 9The idea of introducing corporate criminal liability to theFinnish legal system was first introduced in several committeereports in the beginning of the 1970s. The first report includingthe idea of corporate criminal liability was prepared by theFreedom of the Press Committee in 1973 (report 1973:1). The firstactual proposal for corporate criminal liability was prepared bythe Environmental Offences Committee later in the same year(report 1973:49). The proposal suggested that a chapter in thePenal Code should be devoted to crimes against the environment,and a special penal sanction called "liability fine"(vastuusakko) should be applied to corporate offenders. A similartype of proposal was also advocated by the Labour OffencesCommittee (report 1973:70).Corporate criminal liability was also extensively studied bythe Criminal Law Committee which was in charge of the whole PenalCode Reform. The Committee's work ended with a final report in304. Patrik TOrnudd, Criminal Liability of Corporations: A Surveyof Current Reform Plans in Finland. A draft, May 1976, at 3.1081976 (1976:72). Many questions of principle were decided in thereport, and it has basically determined the direction for thework of the Penal Code Task Force, appointed to continue thelegislative work in 1980. Among several other proposals, the TaskForce published a proposal for the criminal liability ofcorporate bodies (OikeushenkilOn rangaistusvastuu) in 1987.According to the proposal, chapter 9 of the revised Penal Codewill be devoted to corporate criminal liability. Since then, theMinistry of Justice has prepared a Government Bill from theproposal. The Bill is presently under Parliamentaryconsideration.In the following section, the law proposal is examined inlight of the Penal Code Reform as a whole. The presentation isbased on the Government Bill as it was presented in the reportprepared by the Commission for the Examination of Legislation in1990. 3053.2. The Law Proposal3.2.1. The SettingOne of the aims of the Penal Code Reform is to improve thegeneral comprehensibility of criminal law. The basic virtues ofcodification - the values of certainty, consistency,comprehensibility, and accessibility - strongly support effortsto include the general doctrines and the basic legal principlesof criminal law in the Penal Code. Also the principle of305. OikeushenkilOn rangaistusvastuu, supra 24.109legality3 " and the underlying demands for legal security andpredictability require that criminal liability must have itsfoundations in written law. 307These considerations were acknowledged in the Criminal LawCommittee report which emphasized the need to make the criminaljustice system clearer and simpler, so that an ordinary layperson would find it easier to examine the law and discover theconsequences of various courses of action. According to thereport, it is desirable to concentrate all important information- both general rules and crime definitions - in the PenalCode. 3 " With this in mind, the Task Force drafted a relativelydetailed proposal for corporate criminal liability according towhich chapter 9 in the General Part of the revised Penal Codewill be devoted to corporate criminal liability.According to section 1 of the proposal, corporate criminalliability will not be applied to all offences, but only thosePenal Code crimes that specifically refer to chapter 9. Thecommentary of the proposal notes that by limiting the applicationof the law on corporate criminal liability to serious crime, the306. In Latin nullum crimen sine lege, nulla poena sine legepoeneli, meaning that an offender may be sentenced to punishmentor other penal sanction only for an act that was specificallystipulated to be criminal at the time it was committed. Includesalso the notion that general principles of criminal law should bewritten. At present, these principles exist mainly outside thewritten law as guiding maxims of customary law. According to theunofficial proposal for the General Part of the revised PenalCode, these principles would be included in the General Part. Seealso, Recodifying Criminal Law, supra 18 at 17.307. Lappi-Seppald, supra 301 at 1.308. Supra 299.110denouncing and norm-strengthening effect of the law will be mostefficiently emphasized.According to section 11 of the proposed chapter 48 onenvironmental offences, "[t]he stipulations on the criminalliability of corporate bodies shall apply to the offencesreferred to in this chapter." 309 The offences in the chapter varyfrom pollution to unauthorized changing of the environment, andfrom nuisance to damaging an object of protection. Other offenceswhere corporate criminal liability will be applied includeoffences against the public economy (ie. tax evasion, subsidyfrauds), trade offences (ie. unfair competition, marketingcrimes), smuggling, and labour violations.3.2.2. Theoretical FrameworkThis section seeks answers to such questions as what kind ofentities are included in the definition of a "corporation", whatis corporate criminal liability based on, and how does therelationship between a corporation, its servants and agentseffect corporate liability? Entities liableAccording to section 1 of the proposal, as a general rule,corporate criminal liability can be attributed to any kind oflegal persons. In the Finnish legal system, the term "legal309. Rikoslain kokonaisuudistus II, supra 20. This second phaseof the total reform of the Penal Code is in the form of aGovernment Bill, and it is anticipated that the Parliament willpass at least part of the packet by the end of 1992. Translationfrom The Finnish Criminal Code Reform, supra 303.111person" covers a diverse variety of entities from businesscompanies to registered associations and societies, andindependent foundations• 310The most important forms of business companies are limitedliability companies, partnership companies, limited partnershipcompanies, and co-operatives. A limited liability company is themost popular form of a business enterprise in Finland. Thesecompanies are governed by the Companies Act (734/78). Also theco-operative movement is well developed in Finland in variousfields of trade, especially in those connected with the sale andpurchase of consumer goods or farm products. Both a limitedliability company and a co-operation become incorporated themoment they are entered into the Trade Register kept by theMinistry of Trade and Industry.Another important form of business enterprise ispartnership, which, unlike in Canada, is incorporated, and has alegal personality. Partnerships become incorporated the momentthe partners make an agreement about forming a partnership. Withpartnership proper, an oral agreement is enough while in alimited partnership, a written agreement is required. 311310. Other terms used are artificial or juristic person.311. In a partnership proper, all partners are equal with avoting right in the partnership's internal affairs and a right torepresent the company outwards. In a limited partnership, thereare two kinds of partners: those responsible for all theliabilities of the partnership (partners with unlimitedliability), and partners who are under no liability in excess ofan agreed sum for partnership purposes (so called silentpartners). The position of partners with unlimited liability isbasically the same as that in partnership proper while silentpartners do not have a voting right or a right to represent thepartnership outwards.112Associations and societies can be almost anything fromhunting clubs to political parties and labour unions. They becomeincorporated when entered to the Register of Associations kept bythe Ministry of Justice. Although it is perfectly legal to forman association without entering it into the register, theseunregistered associations do not have legal personality. Instead,liability rests on the individual members of the association.The purpose of a foundation is to take care of a certainamount of money or property donated for some specific purpose. Afoundation is independent when it has a separate body, normally aboard of governors, taking care of donation revenues. While anindependent foundation is a legal person, dependant foundationsare not because they do not have rights or duties of their own.The caretaker of the donated money or property is obliged to keepthe donation separated from his personal property, and he isdirectly responsible for any loss or damage caused to the moneyor property.In addition to private entities, a variety of public bodieshave a legal personality. The State of Finland, municipalities,the Evangelical Lutheran Church of Finland, the Orthodox Churchof Finland, and the Finnish Student's Union are examples ofincorporated public persons, while the Bank of Finland, theUniversity of Helsinki, and the Social Insurance Institution ofFinland are categorized as public foundations.In this work, the concept of corporation includes all legalpersons introduced above. In fact, it would be more accurate totalk about "the liability of legal persons", but for the sake of113simplicity, the term corporate liability will be used throughoutthe study. The main thing the reader of this thesis must keep inmind is that the Finnish concept of corporation is quite a bitwider than that in the Canadian legal system, includingpartnerships, registered associations, and independentfoundations.^According to section 1 of the proposal, inaddition to all legal persons, corporate criminal liability canalso be attributed to unincorporated private entrepreneurs whohave large scale business activities, and whose organizationalstructure is similar to that of an incorporated entity. Since theoperations of large private entrepreneurs are often comparablewith the activities of companies or partnerships, differenttreatment would be unjustifiable if the only difference is in theform of the business.With bankrupt estates, death estates, non-profitassociations, foundations and religious communities, the lawproposal limits the liability to the business activities of theseentities. Thus, for example, a death-estate that continuesrunning the business of the deceased is liable for offencescommitted in connection to its business operations.The most important limitation to corporate liability is insection 2, according to which chapter 9 does not apply to theexercise of public authority. What is meant by "exercise ofpublic authority" is not further defined, but generally the termincludes such public powers as judicature, police action, fireservices, or municipal administration. The Task Force defends thelimitation by noting that the use of public authority is already114controlled efficiently through such measures as supervision ofadministration, statutatory investigations, and disciplinaryactions. Also, public officials have a strong criminal liabilityfor their conduct. A violation in office can result in apermanent removal or suspension from office for maximum of twoyears. 312It is important to notice that the limitation does notinclude state or other public companies that perform businessactivities or provide public services such as transportation.The Commission for the Examination of Legislation noted thatthe law proposal is quiet about the position of foreign companieswho commit offences in Finland. Chapter 1 of the Penal Code dealswith the territorial application of the Finnish criminal law, butit is written in such a way that its provisions only apply tonatural persons. The question of applying criminal liability toforeign corporations is an obvious gap in the law and needs to bepromptly filled by the legislature.312. According to section 12 of chapter 2 of the Penal Code, theterm "official" means "government officials and those who havebeen appointed to take care of the affairs of generalestablishments or foundations set up by cities, towns, ruralcommunities, parishes or other communities or by authorities, andthose officials and staff members who are subordinate to such anofficial or administrative body, and also others who areappointed or elected to a public function or to take care of apublic matter." Translation from an unauthorized drafttranslation Penal Code of Finland and the Decree on theEnforcement of the Penal Code, compiled by Matti Joutsen andprovided by The Finnish Research Institute of Legal Policy,Helsinki 1983.1153.2.2.2. The criteria for corporate liabilityAt present, the elements of crime are built in such a mannerthat only a human being can commit a crime. The Task Force didnot want to make radical departures from the traditional criminallaw doctrine. Therefore, in the proposal, corporate criminalliability is not based on wrongful acts or guilty mind of thecorporate entity itself, but on the conduct of its servants andagents. Consequently, corporate liability is always secondary toindividual liability, and apart from some exceptional situations,finding and convicting a guilty individual is a prerequisite forcorporate criminal liability. Also, convicting a corporation inno way eliminates personal liability of the natural person towhom the offence is attributed. He remains liable throughout.Since a corporation is not considered "criminal" in thetraditional sense, there must be some sort of rationale orcriteria for imputing the conduct and culpability of individualsto a corporation. According to section 3 of chapter 9, thesecriteria are:1) A breach in the corporate duty to ensure due enforcementof laws and regulations It is a general principle of law that a corporation (as anyperson or entity) has a duty to obey laws and regulations. Tofulfill this duty, a corporation must ensure due enforcement oflaws and regulations by supervising their application andenforcement internally. According to section 3, this can be doneby selecting and organizing personnel and providing for theirsupervision and training in an appropriate manner, and by116organizing corporate activities and operations otherwise inaccordance with laws and regulations. The breach of this duty isthe first condition for corporate liability.The duty to ensure due enforcement of laws and regulationsis, however, limited to what is reasonable "in thecircumstances". In other words, a corporation is responsible onlywhen its procedures and practices unreasonably fail to preventcorporate criminal violations. Hence, when determining whetherthe corporation is liable, two questions need to be asked;firstly, whether the corporation has behaved in a careful andresponsible manner, and secondly, whether the corporation had, inthe circumstances, the capacity and opportunity to act in such amanner.The openness and flexibility of the phrase "in thecircumstances" is intentional. It is noted in the commentary ofthe proposal that it is impossible as well as unnecessary to listall the duties that can be attached to corporations. The qualityand quantity of these duties is left to the discretion of thecourts. For guidance, the courts can use relevant legislationthat may reveal what is expected from a careful and responsiblecorporation. Also, such matters as the size, structure, and othercharacteristics of the corporation, the nature of the activity,and the seriousness of the possible violation must be taken intoconsideration. Hence, a large corporation who continuously usestoxins in its production methods has a higher duty of care than asmall country store which only occasionally stores suchsubstances. Similarly, if the activity by its very nature is117dangerous, such as operating a nuclear power plant or disposingof lethal toxins, the corporation can be regarded as having aparticular duty to ensure due enforcement of laws.2) Commission of an offence Obviously, a corporation cannot be made liable if there isno offence committed. A mere breach in the corporate duty toenforce laws and regulations does not invoke criminal liabilityif no concrete crime has taken place. Thus, the second criterionfor corporate criminal liability is the commission of anoffence. 313As mentioned above, the Task Force did not desire to give upthe fundamental principle that only a human being can commit acrime. The proposal is based on the notion that a corporationcannot act or think "criminally" because it does not have a bodyto act or a mind to have malice. Instead, corporate liability isbased on attributing the offences committed by corporate servantsand agents to the corporation. Therefore, in principle, findingand convicting an individual is always a prerequisite forconvicting a corporation. Conviction of an individual requiresthere to be a wrongful act and that the individual has thenecessary culpability.In some cases, finding the guilty individual is difficult oreven impossible due to complex structures and delegation ofpowers in the corporation. Hiding an individual behind thecorporate veil can also be done intentionally. If the313. In the proposal, the order of criteria differs from thatused in this presentation. The change has been made in order toimprove the coherence of this presentation.118prerequisite of finding and convicting an individual offender wasfollowed to the word, corporations who have neglected to arrangethe power relations in a clear and exact manner would avoidliability while their more conscientious competitors wereconvicted. In order to avoid such unfair situations, the proposalincludes a provision about anonymous guilt. The provision isreserved for situations where it is obvious that the offence iscommitted by someone inside the corporation, but pin-pointing theguilty individual is not possible. Anonymous guilt can beapplied, for example, when the only possible source of a toxicspill is the one and only factory located by the lake, but it isnot possible to establish the persons responsible for violatingpollution regulations.According to the proposal, anonymous guilt must be reservedfor exceptional cases when efforts to find a guilty individualhave been unsuccessful.Another exception in section 3 provides for situations inwhich it is not possible, for some reason, to bring chargesagainst the individual offender. He might have, for example, fledthe country or died. The provision provides the possibility ofconvicting the corporation in such cases in spite of the factthat the individual offender cannot be prosecuted. However,similar to anonymous guilt, the provision is meant to be usedonly as an exception.3) CausalityThe third criterion for corporate criminal liability is thatthe breach of the corporate duty to internally enforce laws and119regulations and the commission of an offence have a causalconnection. The minimum requirement is that the breach of dutyhas at least considerably increased the prospects of a crimebeing committed. Thus, in order to convict the corporation,prosecution has to prove the fact that the corporation, forexample, neglected to supervise its personnel, organizeeducation, or draw procedure guidelines, caused or at leastsignificantly increased the risk of the violation.What is a "significant increase of risk" can naturally notbe expressed in any exact percentage. According to the proposal,when determining whether the increase is significant, the courtmust rely on the general rules of experience. If the increase, inthe experience of the court, is less than considerable, thecorporation is not liable. The relationship between the corporation and the individual agentEvidently, any act committed by any individual is notimputable to the corporation. Certain qualifications must firstbe met. Section 4 of the proposal deals with the issue. Accordingto the section, the first qualification is that the individual isacting on behalf of the corporation, or for the benefit of thecorporation. "Acting on behalf of the corporation" includes thoseindividuals who have a statutory or delegated power over theparticular area to which the allegedly criminal conduct relates.The essential element is authority.120When someone acts for the benefit of the corporation, hedoes not have formal authority for his actions. In fact, the actmay not even be accepted. Essential elements are an opportunityto act, and the fact that the corporation benefits from theactivity. Hence, if the acts were done for the benefit of thecompany, the corporation may be held liable even though the actswere done in defiance of express corporate policy. The wordingused in the provision as well as the commentary of the proposalseems to support the interpretation that the corporation mustbenefit de facto from the illegal conduct. Hence, mere benefitingpurpose would not be enough to invoke corporate liability.The second condition for corporate liability is that theoffence has been committed by someone belonging to a statutory orother body with decision-making powers (a member of the board ofgovernors, the managing director, a participant in theshareholders' meeting, an auditor), or by a corporate employee,agent, or contractor. Hence, offences committed for the benefitof the corporation by an outsider do not invoke corporateliability. The actor must be someone working or acting in or forthe corporation.3.3. Sentencing CorporationsThe following presentation is based on both the generalcriminal law doctrine as it appears in the Penal Code andcustomary law, and on the law proposal on corporate criminalliability. The section starts with a short survey of the dominant121Finnish sentencing principles, and then moves on to discussingthe corporate fine and the criteria that will be applied whendetermining the size of the corporate fine. The last part of thesection deals with waiving of the measures.3.3.1. Sentencing Rationale and PrinciplesAccording to the Finnish criminal law doctrine, the aimofthe system of sentencing lies in prevention of crime, andthrough this, the increase in and equitable distribution of well-being. This utilitarian rationale for the use of penal sanctionsis bound to the benefits the sentencing system offers to society,as well as to the fairness of the laws and regulations that aremaintained through the threat of penal sanctions. 314The paramount sentencing principle through which the aim ofcrime prevention is sought is general prevention. 315 The Finnishlegal scholars prefer the term general prevention to generaldeterrence because the former is the more comprehensive of thetwo. Deterrence is only one aspect of general prevention. Ratherthan deterrence, the Finnish and Scandinavian textbook314. Tapio Lappi-Seppäld, Rangaistusten maarAamisesta I: Teoriaja Yleinen Osa. ("Sentencing I: Theory and General Part). ADoctoral thesis, 1987 Helsinki at 661; Criminal Law CommitteeReport, supra 299 at 62.315. Up till the 1960s sentencing theories were dominated bySwedish-style rehabilitation ideology that stressed individualtreatment of offenders. The ideology became abandoned as a resultof strong criticism of social scientists and negative experiencesobtained from treatment programmes. Since the beginning of 1970s,general prevention has taken the dominant position in the Finnishsentencing ideology. General prevention is supported by otherprinciples such as individual prevention, incapacitation, andrehabilitation. Their role is, however, clearly secondary togeneral prevention. See TOrnudd, supra 304.122definitions of general prevention emphasize the norm-strengthening impact of a properly working sentencing system. Apenalty is regarded as a demonstration of society's reproachthrough which citizens' sense of morals and justice is reinforcedand their inhibitions against committing crimes are strengthened.In order to perform its inhibition-reinforcing function, apenalty must carry a degree of denouncing stigma. 316 The pursuitof norm-strengthening is primarily based on people's knowledge onthe criminal justice system and certainty and speed ofapprehension and conviction. Strict penalties are clearly asecondary goal. 317Although the justification for the existence of penalsanctions is the prevention of crime, the prevention is notpursued blindly. In fact, minimization of the harmful effects ofcriminality and the effects caused by the measures of its controlare regarded as more worth striving for than the elimination ofcriminality as such. This limitation has brought about a varietyof legal safeguards and principles that are meant to guaranteethe justness and humaneness of the sentencing system. Some of themost important principles are predictability, proportionality,equality, and mercy. 318316. See, for example, Inkeri Anttila & Patrik TOrnudd,Kriminologia ja kriminaalipolitiikka ("Criminology and crimecontrol policy": a textbook). Publication of the Finnish Lawyers'Association, series B, number 194. 1983 Juva, at 156-59; RaimoLahti, "Recodifying the Finnish Criminal Code of 1889" in Towardsa Total Reform of Finnish Criminal Law, supra 288 at 57-58.317. Raimo Lahti, "The Utilization of Criminological Research inFinnish Criminal Law Reform" in Towards a Total Reform of FinnishCriminal Law, ibid. at 45.318. Ibid. at 45; Lahti, supra 316 at 57-59. See also CriminalLaw Committee Report, supra 299 at 67-70.123According to the Criminal Law Committee, predictabilityrequires clarity and simplicity from the penal system. With thisin mind, the Committee demanded in its 1976 report that onlysanctions officially termed as punishments be used for punitivepurposes. Administrative sanctions should never be used for suchpurposes, unless the administrative sanction is so lenient thatthe justice issue becomes irrelevant. 319 The Criminal LawCommittee's hostility toward administrative punitive sanctionscarried weight in the Task Force's proposal for corporatecriminal liability. After a lengthy debate the Task Force votedthat the new sanctions be termed punishments. According to theTask Force, calling sanctions punishments instead of somethingelse underlines the disapproving stigma attached to penalsanctions and keeps the penal system clear and simple. 320According to the prevailing criminal law doctrine, penaltiesmay not be cruel or inhumane, nor may they violate the principlesof equality, proportionality, or mercy. 321 The principle ofproportionality requires just relation between the offence andthe penalty. The threats of punishment as well as actual penalsanctions must be in accordance with the principles of guilt and319. Ibid. at 86-88.320. In Sweden a sanction called "corporate fine" (foretagsbot)is classified as "other special consequence of a crime" (annansdrskild rdttsverkan av brott). The minimum of Swedishforetagsbot is 10.000 crowns, and the maximum is 3 millioncrowns. (One Canadian dollar is about 5 crowns.) In Finland, theSwedish approach has been criticized because in reality, theeffects of the foretagsbot are very close to those of a penalty.According to the Finnish approach, only formal punishment shouldbe used for punitive purposes because "hidden" punishments tendto confuse the system and threaten legal safeguards.321. Criminal Law Committee Report, supra 299 at 67-72; TapioLappi-Seppald, supra 314 at 660.124proportionality, and in reasonable relation to the harmfulnessand blameworthiness of the facts. The rationale of the principleis to assure that there is a balance between the offender'sdegree of blameworthiness and the intensity of society'sreaction.The principle of equality requires that similar punishmentsbe given in similar cases. Equality is also a part of the demandfor consistency in the administration of justice and theprohibition of arbitrariness. The principles of proportionalityand equality are stated in chapter 6 of the Penal Code. Section 1of the chapter provides ;that[i]n measuring a punishment all the grounds increasing anddecreasing the punishment which affect the matter and theuniformness of sentencing practise shall be taken intoconsideration. The punishment shall be measured so that it is inlust proportion to the damage and danger caused by the offence andto the quilt of the offender manifested in the offence (emphasisadded).' 2The principle of mercy incorporates the idea of a certaindegree of flexibility. 323 The principle has been expressed insection 4 of chapter 6 of the Code. It provides that(i]f the offence has caused or the resultant punishment hasimposed on the offender another consequence which togetherwith the punishment... would lead to a result that isunreasonable in comparison with the nature of the offence,such situation is to be taken into consideration as is reasonable in measuring the punishment (emphasis added).Other values emphasized in the Criminal Committee's Reportwere straightforwardness and the economics of the penal system.322. Translation from Penal Code of Finland and the Decree on theEnforcement of the Penal Code, supra 312.323. There is no coherent English translation for this lastprinciple of "kohtuus". Expressions such as "equity", "fairness"and "reasonableness" can be used in this context together with"mercy".125In addition, the system should be built in such a manner thatunregulated cumulation of sanctions can be avoided. 3243.3.2. The Corporate FineThe only suggested penalty for a corporate offender is theso called corporate fine. According to the Task Force, the goalof general prevention is most efficiently met through the fine.According to section 5 of chapter 9, the minimum corporate finewould be five thousand marks, with the maximum being four millionmarks. 325The earlier forms of the proposal suggested that the fineshould be supplemented with another penalty, a warning, whichcould be used in less serious offences. It was also proposed thatthe imposition of the fine could be suspended in some cases. TheTask Force's original proposal also recommended formalpublication of the conviction. The sanctions were, however,considered unnecessary and they were excluded from the finalversion. Suspension of the fine was considered too difficult toadminister. A warning was regarded as too meager to have anypreventive effect, and since trials are public, informalpublicity was considered sufficient.The small selection of sanctions is in line with theCriminal Law Committee's aim to keep the sentencing system clearand simple. The Committee's objective was to keep the number ofcriminal sanctions low and strictly separate from civil and324. Criminal Law Committee Report, supra 299 at 70-72.325. In September 1991, one Canadian dollar was about 3,6 Finnishmarks.126administrative sanctions. For this reason, the Task Force did notconsider including special sections on compensation, restitution,or forfeiture in the proposal. These measures are alreadyprovided for elsewhere in the legislation.The latitude of the fine was under a lot of discussion.Latitudes are an important legal safeguard, and they assign therelative penal values of offences. With the corporate fine,finding a balance between the demands for predictability andsufficient flexibility appeared to be particularly difficult.Some argued that it would be better to leave the maximum open,because it is impossible to forecast how serious "the worst case"can possibly be. However, the Task Force decided to set a fixedmaximum fine justifying its decision on the principle of legalityand on general preventive reasons.Since corporate criminal liability is built on doubleliability, double sanctions could in some cases lead tounreasonable hardship since penalizing both the individual andthe corporation can, with small companies, mean punishing thesame person twice. This has been taken into consideration insection 9 of the proposal which provides the court with apossibility to reduce the corporate fine to an equitable amountwhen the offender is an unincorporated private entrepreneur. Theintention is good, but the provision falls short by excludingother small businesses. A two partner partnership or other smallentity is hardly in a different situation from a largeentrepreneur. Therefore, categorizing the two groups differentlyis illogical. Such a discriminatory provision is also127contradictory to section 2 of the chapter in which big privateentrepreneurs are placed on an equal footing with smallincorporated entities.3.3.3. Sentencing CriteriaIn addition to general sentencing principles ofproportionality, equality, and mercy discussed above, theproposal includes a variety of factors that the court must takeinto consideration when determining the size of a corporate fine.According to section 6 of the proposal, these factors are thenature and extent to which the corporation has breached its dutyto ensure proper enforcement of laws and regulations, and thecorporation's ability to pay. The two criteria are meant to weighabout the same in the assessment.Although it is impossible to give exact rules on theassessment, the proposal provides some guidelines to help thecourts. According to subsection 2, when appraising the nature andextent of the breach, such factors as the seriousness of thebreach, the extent of criminal activity, the position or statusof the individual actor within the corporation, manifestation ofgeneral disregard for laws and orders, as well as the generalaggravating and mitigating factors provided in chapter 6 of thePenal Code shall be taken into consideration. The list of factorsis not exclusive, but rather provides examples of differentfactors that can influence the sentencing decision.When considering the seriousness of an offence, theessential factor is the degree of corporate negligence rather128than the seriousness of the criminal act committed by anindividual. Thus, the more serious the breach in corporateduties, the more strongly such corporate behaviour must becondemned. For example, intentional encouragement of employeesinto non-compliance must be regarded as more serious thanneglecting employee training because of obvious thoughtlessness.The extent element has several aspects. For one thing,several individuals working in or for the corporation can beinvolved in the wrongful activity. Secondly, the activity mighthave been going on for long periods of time. A furtherpossibility is that illegal activity has become almost habitualin the corporation; none of the specific acts may not be veryserious in itself, but the continuous breach of laws andregulations can be regarded as an expression of general"lawlessness" in the corporation's activities. Criminal activitycan also be viewed as extensive when it effects a largegeographical area or vast numbers of people. In all these cases,extensive criminal activity must be taken into account as anaggravating factor.A further important factor is the status or position of theindividual actor who actually commits an offence. The higher upin the organization the individual is, the easier it is toidentify his actions with those of the corporation. Hence, anoffence committed by a person with a considerable amount ofauthority must be regarded as more condemnable as an offencecommitted by someone on the lower steps of the corporate-ladder.129If the offender is manifestly heedless of the prohibitionsand commands of the law and government officials, it must betaken into consideration as an aggravating factor in sentencing.The proposal does not define what such "heedless behaviour"consists of, but obviously such factors as continuous breach oflaws and regulations, or breaking a specific order given by agovernment official could be regarded as constituting suchbehaviour.The general aggravating and mitigating sentencing factorsare included in chapter 6 of the Penal Code. The aggravatingfactors applicable to corporations include deliberate planningand risk taking, and committing the offence for remuneration.Regarding deliberate planning and risk taking as an aggravatingfactor requires that commission of the offence was approved by anauthoritative body, such as the board of governors. An offence iscommitted for remuneration when the corporate offender receivesdirect or indirect financial or other benefits, such as money orbusiness favours, for committing the crime from someone outsidethe corporation. Such a situation can take place, for example,when a corporation "hires" another corporation to illegally dumphazardous waste."[S]ignificant pressure, threat or similar influence on theperpetration of the offence" and "voluntary attempt...to preventor remove the effects of the offence or to further the clearingup of his offence" are regarded as mitigating factors. 326326. Translation from Penal Code of Finland and the Decree on theEnforcement of the Penal Code, supra 312.130Particularly small and financially dependent (such as branch-plant) corporations can come under such pressure from a largercompany that they are practically forced into committing a crime.Voluntary attempts to mitigate the damages and helpinginvestigators are important to secure fast and efficientreparation of damages. Payment of restitution or compensation canbe regarded as such attempts.It is a general criminal law principle that the offender'sability to pay should be taken into account when determining thesize of the fine. 327 Also, the principle of equality requiresthat similar offences must be treated the same, but obviously,when assessing the similarity of penalties, one cannot look onlyat the actual size of the fine. The impact of the penalty ondifferent offenders must be taken into account as well.According to subsection 3 of section 6, when assessing thecorporation's ability to pay, the factors that can be taken intoaccount include the size of the corporation, the financialstability and the financial results of the corporation. Also, ifcorporate income is divided unevenly over certain periods oftime, this should be noted in the assessment. The correctness ofthe company's financial statements must naturally also beverified.327. The principle has influenced the development of the Finnishday-fine system in which the amount of the fine is determined, inaddition to the seriousness of crime, on the basis of theoffender's wealth.1313.3.4. Waiving of the MeasuresIn principle, the conviction of a corporation is obligatorywhenever the conditions for corporate criminal liability are met.Provisions in sections 7 and 8 on waiving of the measures easethe strictness of the law by providing officials with morediscretion.According to section 7, in the case of a petty offence, theprosecutor may refrain from raising charges if the corporationhas made the necessary efforts to rectify the problem that causedthe violation, and the danger or damage caused by the offence issmall. Also, if it is obvious that the prosecutor will notprosecute in the case, the police can refrain from reporting theoffence. Section 8 empowers the court to refrain from imposing apenalty on similar grounds. It must be noted that application ofthe provisions of the waiving of measures does not relieve theoffender of responsibility for any damage caused by the offence.Although the Task Force underlines the fact that theuniformity of sentencing practice requires cautious use of thewaiving of the measures provisions, their mere existence createsa big loophole in the law on corporate criminal liability. Theobjectivity of judicial authorities is not always guaranteed,particularly so in small communities. Uncomfortable situationsmay be avoided by waiving the measures. If such a possibility isincluded in the law, special attention should be paid to itsproper application.1324. CORPORATE CRIMINAL LIABILITY AND SOCIAL FUNCTIONS OF LAW:EVALUATION OF THE CANADIAN EXPERIENCE AND THE FINNISH LAWPROPOSALAccording to Harold Berman and William Greiner, "law is aform of social control", and "legal order is one important way ofholding a society together." 328As the definition states, law is not the only way of keepinga society together, but it exists side by side with other formsof social order, such as family, the educational system, orpolitical structures. However, certain characteristics, such asformality, publicity, generality, and objectivity make lawdifferent and distinct from the other forms of social order.Moreover, law is generally employed only when things go wrong orwhen it is anticipated that they will or can go wrong. Inventionof a law, either legislative or "judge-made", is one response tothe challenge set by disruption in social norms ororganizations. 329The law functions through three components which are aimedat meeting the challenge of holding a society together. Bermanand Greiner call these components the social functions of law.The first of these functions is quite obvious; to restoreequilibrium to the social order when that equilibrium, or a partof it, has been disturbed. The function can be restated moresimply as resolving disputes in society.328. Supra 25 at 7.329. Ibid. at 25-28.133Mere dispute settlement is not, however, enough to secureefficiency and rationality in society. In order to actefficiently, people must to a reasonable degree be able tocalculate the consequences of their conduct. Therefore, thesecond function of law is to maintain predictability in societyand protect normal expectations of its members.The third function consists of molding the moral and legalconceptions and attitudes in society. The function is ofparticular importance on areas of large-scale social problemswhich cannot be solved without firm government interference, andwhich at the same time require substantial change in traditionalattitudes and values. Regulation of labour relations andenvironmental behaviour are examples of laws which attempt toamend and change the ways people think, feel, and act. 33°The social challenge discussed in this thesis is thatcreated by the corporations not complying with environmental lawsand regulations. One of the measures chosen to answer thechallenge of non-compliance is the law on corporate criminalliability. The two earlier chapters of this thesis were devotedto introducing two different approaches to penalizingcorporations - those adopted in Canada and Finland. This chapteris designed to evaluate the successfulness of the two approachesin meeting the challenge of non-complying corporations in lightof the three social functions of law. The chapter does notattempt or claim to cover comprehensively all the problemsrelated to the present legislation, but it is more of an overview330. Ibid. at 31-35.134of some of the problems involved in achieving corporatecompliance with environmental legislation through the applicationof corporate criminal liability.4.1. Restoring the EquilibriumAs noted above, the first and foremost function of any lawis to restore the equilibrium to the social order when thatequilibrium has been disturbed. With regard to the topic of thispaper, this means the application of corporate criminal liabilityto adjust the disequilibrium caused by illicit corporateenvironmental behaviour.Restoring the equilibrium consists of two aspects; fromsociety's perspective, dispute resolution serves as a means toreaffirm the social norms that were broken in the violation. Fromthe point of view of the aggrieved party, the process can bedescribed more simply as resolving disputes between the parties.Thus, for the victim, restoration means a legal remedy thatsatisfies his financial and mental grievances. With environmentaloffences, victim compensation has an additional aspect; that ofrestoring and cleaning up the damaged environment. Such measuresare essential because restoring the natural and legal equilibriumdo not necessarily always meet; if the polluted area has nomonetary value, or if human health or life are not directlyendangered, it is hardly likely that someone will demandreparative actions on the damaged site. It is also possible thatthere is no individual, identifiable victim in an environmental135offence. In such cases, the interests of the environment need tobe secured by government action. 331How the goals of norm-strengthening and redress have beenaccomplished in the Canadian experience and the Finnish lawproposal will be looked at next.4.1.1. Reaffirming the Norms Set in EnvironmentalLegislationIn order to confirm the concept that corporations are trulybound by the norms set in environmental laws and regulations, thelaw on corporate criminal liability must be practically feasible.This requires real accountability from the entities engaged inbreaking environmental statutes; if the law is built in such away that it enables corporations to escape from liability throughtechnical or procedural loopholes, the law is obviously notserving its purposes.Once the liability has been established, the resultingsanction must appropriately support the objective of norm-strengthening. A trivial sanction with little or no negativeconsequences to the offender frustrates the whole idea ofcorporate criminal liability.The law must also be built in such a manner that it isequitable in its treatment of those affected. If the system is331. Ibid. at 31.136perceived as unfair and unequal, its plausibility and thereby itsnorm-strengthening impact evidently suffers. 3324.1.1.1. Entities liable The requirement of equal treatment leads us to the firstproblem with the existing legislation on corporate criminalliability, the question about the entities liable. Obviously,liability should be built in such a manner that it does notexclude or include certain entities solely because of the form inwhich they have chosen to run their business. The fact that abusiness is operated in the form of a partnership does notnecessarily make its activities any less hazardous than those ofan incorporated entity.The perspective that emphasizes the function of the entityrather than its form has been adopted in the Finnish lawproposal. According to the proposal, even private entrepreneurswho operate large-scale business and whose organizationalstructure is similar to that of corporations can be prosecuted.Liability also applies to such entities as partnerships,registered associations, and foundations.In Canada, corporate criminal liability is principallylimited to incorporated entities. The Canadian Law ReformCommission has on several occasions criticized the limitedapplication of liability, and suggested that criminal liabilityshould not be restricted to corporations but should be expanded332. See David Trezise, Alternative Approaches to Legal Controlof Environmental Quality in Canada. (1975) 21 McGill Law Journal404.137to other forms of collective action, such as partnerships, jointventures and non-profit organizations. 333 Although the core offinancial power and authority is well established in the hands ofcorporations, small unincorporated enterprises, such aspartnerships or sole proprietorships, form an important part ofthe Canadian economy. 334 Businesses from all of these groups arecapable of contributing to environmental degradation; forinstance, such common incorporated enterprises as dry cleaners,service stations, and painters use, store, and dispose of toxicand other harmful chemicals. Excluding these kinds of enterprisesfrom liability, particularly when they are large scale operationswith a refined organizational structure, does not appear logicalwhen, at the same time, any one-person corporation can be madeliable.There is another aspect in which the Finnish proposal ismore successful with regard to the requirement of equaltreatment; in the Finnish proposal, state and other publiccorporations carry similar liability to that of privatecorporations. Only "exercise of public authority", such aseducation, health care, fire services, or municipaladministration, is excluded from liability.333. Recodifying Criminal Code, supra 18 at 27; CriminalResponsibility for Group Action, supra 98 at 53-56. See also,Leigh 1977, supra 28 at 251-52.334. Duncan Chappell, From Sawdust to Toxic Blobs: AConsideration of Sanctioning Strategies to Combat Pollution inCanada. (Ottawa: Minister of Supply and Services Canada, 1989),at 14-15. See also, H. J. Glasbeek, The Corporate SocialResponsibility Movement - The Latest in Maginot Lines to SaveCapitalism. (1988) 11 Dalhousie Law Journal 363 at 394-95.138In Canada, the liability of Crown corporations issignificantly more limited than that of other forms of enterpriseleading to a situation in which the principle of equal treatmentis seriously threatened. One of the most popular arguments forlimited liability arises from the claim that the effect of fininga Crown corporation is simply to fine the public at large, andthat the cost of the fine can be passed onto the public. But, itmust be noted that such "passing on" does not occur exclusivelywith public corporations; similar effects are common also withprivate corporations in the form of lower dividend, higherprices, or lost jobs. Hence, excluding public corporations fromcriminal liability on the basis of the "passing on" argument ishardly valid.Making an exception with public polluters is absurd also inthe light of statistics that show that public companies are farfrom innocent when it comes to violating environmentallegislation. For the record, a study made in Ontario revealedthat in 1985, a quarter of Ontario's municipal sewage treatmentplants violated three basic pollution guidelines and failed tomeet their annual pollution targets. 335 Besides, many areas ofgovernment activity carry potential for extreme environmentaldisasters - nuclear energy and the military representing some ofthe most dangerous of government operations. 336 Furthermore,335. Chappell, ibid. at 15.336. Andrd Picard, Inuit Villagers' Referendum Puts Crimp in AirDefence Plan. Globe and Mail, June 17, 1991, at 5. Picard refersto the Inuit village of Kuujjuac in northern Quebec as "probablythe most polluted community in Canada's North" as a result ofmilitary activities that took place after the Second World War.The waste on the area includes old radar systems whose remnants139giving special treatment to public corporations and governmentactivities hardly encourages private corporations to comply withenvironmental legislation; if the government does not comply withits own legislation, how can they expect anyone else to do so? Corporate blameworthiness A fundamental principle of criminal law is the generalundesirability of imposing criminal liability in the absence ofsome element of fault. According to Hart,"(i)n all advanced legal systems liability to conviction forserious crimes is made dependant, not only on the offender havingdone those outward acts which the law forbids but on his havingdone them in a certain frame of mind or with a certain will..." 337With individual offenders, the fault or blameworthiness isdetermined on the basis of the offender's mental state. Since acorporation does not have a mental state, corporateblameworthiness must be built in some other way. In the Canadiansystem, corporate blameworthiness is identified with the mentalstate of its individual agents. Identification doctrine arisesfrom the fact that a corporation cannot act on its own but onlythrough its servants and agents. Hence, the act or omission of acorporate servant is the conduct of the corporation, and theguilty mind of a servant is the guilty mind of the corporation.In mens rea offences, only higher echelon corporate executivesare identified with the entity, and accordingly, only theirleak toxins, such as PCNs and jet fuel into the fragile Arcticenvironment, 20,000 rusting barrels of coal tar and fuel, dozensof rusting military vehicles and other military carbage.337. H.L.A. Hart, Punishment and Reposibility. (Oxford: ClarendonPress, 1968), at 187. See also, Developments in the Law, supra 10at 1241.140guilty mind invokes corporate liability. With strict and absoluteliability offences, identification reaches all levels ofcorporate servants, and corporate liability is based on theconduct of any corporate employee or agent. The defence of duediligence, however, must be established in the directing minds ofthe corporation.The Finnish approach is different from that adopted inCanada. Instead of identification, corporate liability is basedon the standard of a corporation's internal processes. Therationale for imposing liability on a corporation lies in thecorporate duty to enforce laws and regulations internally. If thecorporation has breached this duty, it has behaved in ablameworthy manner, and imposing the offences committed bycorporate servants to the corporation is justified. Corporateliability therefore depends not solely on the commission of anoffence by an individual corporate servant, but on the overallreasonableness of corporate practices and procedures designed toprevent illegal behaviour.The rationale of corporate liability, as opposed toindividual liability, is to emphasize the structural, collectivefault that has led to the commission of an offence. Subsequently,corporate blameworthiness should be based on this structuralfault, not on individual conduct. Of the two systems, the Finnishapproach is more successful in meeting this aspect of corporateliability. The Finnish theory, better than its Canadiancounterpart, emphasizes the fact that corporate offences oftenresult, not from an isolated act of an individual, but from141faulty corporate policies and complex interactions of manycorporate servants. Consequently, the Finnish system carries morepotential in meeting the norm-strengthening goal since itspecifically denotes the fact that liability rests on the entity,not on individuals. 3384.1.1.3. Evasion of liabilityAs mentioned above, the norm-strengthening impact of thesystem is greatly dependent on the real accountability of theentities involved in illegal activities. If a corporation canbenefit from illegal acts of its servants but get away withoutbecoming subject to liability, the law is evidently notfunctioning properly. Such dysfunction can be caused by either atechnical or a procedural loophole in the law. 339 Both types ofget-aways can be found in both the Canadian and Finnish system.Generally, the big problem with the Finnish law proposal is theheavy prosecutorial burden of proof whilst in Canada loopholesare of more technical nature.One such get-away for Canadian corporations was created inR. v. Dawson City Hotels Ltd. when the court ruled thatidentifying the directing mind and will of the corporation is aprecedent condition for finding the corporation criminally liablein offences that require wens rea. 340 In other words, if noguilty individual can be identified, the corporation cannot beconvicted. Consequently, it is in the corporation's best interest338. See, Developments in the Law, ibid. at 1243, 1257-58.339. Ibid. at 1253.340. Supra 65.142to make the power relations within the corporation so complicatedthat finding the responsible directing mind becomes verydifficult if not impossible. Corporations who have neglected toarrange their power structures in a clear and exact manner or whohave intentionally hidden the directing minds behind thecorporate veil would avoid liability while their moreconscientious competitors were made liable.The requirement also seems to put big and small corporationsin an unequal position; complex, multidimensional powerstructures are typical to large corporations while smallercompanies tend to have fewer layers of authority and less sharpdifferentiation between managerial and operational roles.Accordingly, hiding behind the maze of power structures andthereby evading liability is easier for large corporations thanit is for small companies. 341Since a Canadian corporation is liable only for mens reaoffences committed by its directing minds, corporations couldtheoretically avoid liability also when the directing mind hasdelegated her responsibilities to someone who is not normallyregarded as a directing mind. However, in light of legalpractice, escape from liability is at best doubtful. Theprevailing view accepts the delegation of the powers and dutiesof a directing mind, and in some cases, delegation has reachedquite far down on the corporate ladder. A low-level officer oreven an employee can be regarded as the directing mind and will341. Developments in the Law, supra 10 at 1254-55.143as long as she has a measure of discretion and control on thearea of operation. 342In the Finnish proposal, although in principle finding theguilty individual is a prerequisite for convicting thecorporation, invention of anonymous liability has at least intheory eased the strictness of the requirement. However, sincethe application of anonymous guilt does not relieve theprosecutor from the burden of showing that a crime has takenplace - that there is a wrongful act and required culpability -the provision on anonymous guilt might be left with littlepractical value. Showing that someone was negligent shouldgenerally not cause overwhelming difficulties, but proving ahigher degree of culpability, such as intent or aggravatednegligence, can be practically impossible if the guilt cannot beassigned to a specific individual. Most offences under proposedchapter 48 on Environmental Offences require intent or aggravatednegligence. 343 Subsequently, in order to invoke corporateliability, the prosecutor must show that someone within thecorporation intentionally or with aggravated negligence committedthe forbidden act. If the required culpability cannot be proven,the corporation will either escape liability entirely, or beconvicted only for negligence.The heavy evidentiary burden appears all through the Finnishproposal. Both the Environmental Offences Committee and the342. See for example, R. v. Waterloo Mercury Sales Ltd., supra58; Karen Reese v. London Realities & Rentals, supra 57.343. For more information on the concept of "aggravatednegligence", see Lappi-Seppdla, supra 301 at 21.144Labour Offences Committee recommended partially reversed onus,but the final proposal is based on traditional criminal law onusin which it is the prosecution's duty to establish the facts ofthe crime. The heavy onus can cause particular difficulties withsection 3 which provides the prosecutor with the obligation toshow a breach in the corporate duty to internally enforce lawsand regulations. In its report, the Commission for theExamination of Legislation criticizes the heavy onus, and arguesfor reversed onus with regard to showing the breach of corporateduty. The Commission suggests that instead of having theprosecutor prove the breach of duty, the corporation should showthe measures undertaken by the corporation to internally enforcelaws and regulations. After all, it is the corporation who hasthe primary, and often the only, access to information regardingthese measures.It must be noted that the concept of reversed onus is nottotally foreign to the Finnish criminal law tradition. Section 32of the Freedom of the Press Act (19/1) provides the presumptionof negligence of the editor of a periodical journal with regardto offences committed through the articles in the journal. Unlessthe editor can show due diligence, he is considered guilty. AFinnish authority on criminal law, Brynolf Honkasalo, hasspecifically pointed out that the provision is not an exceptionto the general requirement of culpability but a way to ease theprosecutor's burden of proof.344344. Honkasalo, supra 293 at 21-23.145In Canada, the difficulties in establishing corporate guiltwas one of the reasons for the development of strict and absoluteliability offences. In R. v. Sault Ste. Marie, the Supreme Courtacknowledged that due diligence would normally be within thespecial knowledge of the defendant, and cast the burden of proofabout due diligence on the defendant. 345 The standard of proof isa balance of probabilities; hence, the defendant must show thatit was more than likely that it had done everything reasonable toprevent the offence. If there is no evidence of care, thedefendant will be convicted, that is, care by the directing mindsof the corporation. In other words, the corporation must showthat the commission of an offence took place without direction orapproval from a directing mind of the corporation, and that thedirecting mind(s) exercised all reasonable care by establishing aproper system to prevent commission of the offence, and by takingreasonable steps to ensure the effective operation of thesystem. 346 Since the burden of proving due diligence is left tothe defendant, it is in the corporation's best interest toencourage compliance and make efforts to arrange the powerstructures in a clear and consistent manner.The Finnish Commission for the Examination of Legislationhas suggested similar arrangements to the Finnish law oncorporate criminal liability. According to the Commission, if areversed onus cannot be accepted, an alternative way to ease theburden of proof would be to lighten the standard of proof from345. Supra 41.346. See Saxe, supra 2 at 147-48.146the proof beyond a reasonable doubt to the balance ofprobabilities. Once the prosecutor has established on the balanceof probabilities that a breach has taken place, the defendantcould prove its innocence by showing that its behaviour has beenappropriate. Interrelationship between corporate and individual liabilityOne of the major arguments among those opposed to the ideaof corporate criminal liability is that readily available findingof corporate liability shifts liability away from, and thereforeinsulates, individuals who work within a corporation, providing ashield for irresponsible behaviour in corporate decision-making. 347 The argument derives direct support from the presentCanadian practice of environmental prosecutions. The vastmajority of environmental cases are strict liability offences inwhich, unlike in mens rea offences, finding the guilty individualis not a prerequisite for convicting the corporation.Accordingly, while corporate prosecutions are common, prosecutionof corporate servants and agents has been rare. The use of doubleprosecutions has, however, become more common during the secondhalf of the 1980s. This might indicate the beginning of moreactive application of dual liability.There are several good reasons to prosecute both thecorporation and the individual agent. For one thing, thepossibility to penalize both the corporation and the individual347. Criminal Responsibility for Group Action, supra 98 at 33.147increases the number of possible prosecutions; if finding groundsfor prosecuting the corporation is not successful, there mightstill be enough evidence against a corporate servant or agent -and visa versa. The fact that the prosecution can "take theirpick" offers two qualitatively different pressure points andthus, two chances for successful crime prevention. 348 Secondly,the reality is that collective liability notwithstanding,corporations must act through individuals. Therefore, prosecutingcorporate directors has an important normative function; itunderlines the fact that corporate compliance begins with thedirectors and senior management. They have a particular duty toestablish a proper ethical climate and corporate culture. Thisduty was expressed by Justice Bourassa in R. v. NorthwestTerritories Power Corp. as follows:[t]hese are the officers, the people, that corporate law puts incontrol. These are the people who have accepted the responsibilityof overseeing and directing the corporation's management...Theyreflect the corporate character and must be accountable for it. 349A further argument for dual prosecutions is based on theeffectiveness aspect. Most legal scholars seem to assert thatdual prosecution is more effective in obtaining compliance thansimply prosecuting the corporation. 350 Both directors andemployees share the fear of personal prosecution. The348. Saxe, supra 2 at 43.349. Supra 114 at 65.350. See for example, Robert Iseman, The Criminal Responsibilityof Corporate Officials for Pollution of the Environment (1972) 37Albany Law Review 61; Tracey Spiegelhoff, Limits on IndividualAccountability for Corporate Crimes (1984) 67 Marquette LawReview 604. See also Saxe's survey, supra 2 at 45-54 whichindicates that compliance would be particularly high if corporatedirectors were personally liable for prosecution.148reprehensible stigma attached to criminal prosecution forms asignificant deterrent to comply with legislation. Such stigmamight be of particular significance with corporate management whohave their social standing at stake. The possibility of personalprosecution might also give a further incentive for the employeesto resist the pressures from above to break laws and regulations.When determining the interrelationship between individualand corporate liability, it must be kept in mind that corporateliability could be of particular importance in situations whereit is impossible to establish the guilt of any one person. Also,unlike individual liability, corporate liability emphasizes theneed to judge corporate behaviour as a whole. The requirement offinding a guilty individual restricts the reach of the criminallaw from finding fault in a group itself which might bedesirable. While it is important not to shield individuals fromjustified criminal liability, the system should also enablecorporate prosecutions in cases where an offence cannot beimputed to any particular individual. 351The Finnish proposal attempts to solve the problematicinterrelationship issue by introducing anonymous guilt tocorporate criminal liability. Although in principle, finding theguilty individual is a prerequisite for invoking corporateliability, the requirement is eased with the provision onanonymous guilt which enables the court to convict a corporationeven when no individual offender has been prosecuted orsentenced. However, the use of anonymous guilt is limited to351. See Hanna, supra 36 at 465.149exceptional cases in which it is evident that someone within thecorporation must have committed the offence. The system providesmore flexibility than the Canadian practice in mens rea offencesin which finding the directing mind is always necessary. At thesame time, it - at least in theory - bestows the prosecutor withthe duty to find the guilty individual thus utilizing the norm-strengthening effect of double liability to the maximum. Onlytime will tell whether the provision on anonymous guilt will beused according to these fine principles or whether it will giveprosecutors an easy way out when identifying a guilty individualrequires great effort.Fair application of double liability requires equaltreatment of individual offenders regardless to their status orposition within the corporation. The Canadian practice appearssomewhat questionable in this respect. One reason for the rareuse of dual prosecutions in strict liability offences might bethe strict standard of proof set on the prosecutor with regard tothe mental state of a directing mind. It was ruled in R. v. Fellthat in spite of the strict liability nature of an offence,convicting the directing mind requires mens rea from his part. 352At the same time, common law of negligence applies to any othercorporate employee. The negative impact of such discriminatorypractice was acknowledged by Justice Stuart who notes thatby ignoring the criminality of responsible corporate officers, thecriminal law process is offering concessions to one class ofoffenders not afforded to others. This practice can only engendera public perception of bias and unjustifiable discrimination. 353352. Supra 65.353. R. v. United Keno Hill Mines Ltd., supra 94 at 54.150The requirement of equal treatment also raises a questionabout the cumulation of sanctions in small entities. In small,closely held or one-person companies, penalizing both thecorporation and its directing mind may result in excessivepenalties. The issue came up in Shamrock Chemicals Ltd. et. al.v. R. in 1990 when Ontario District Court was faced with thequestion of whether penalizing both the company and its directingmind was in effect penalizing the same person twice. 354 Thecompany in question was a so called "one person corporation" withMr. S. being "the embodiment of the corporation who kept theplace going". The appellant argued that the penalty imposedagainst the corporation would be felt by Mr. S. directly andtherefore penalizing Mr. S. separately from his company meant inpractice punishing him twice. In the decision, Justice McDermidnoted that by choosing to run his business through a corporateform, Mr. S created a separate legal person and that he must bearthe burdens as well as enjoy the benefits of that voluntarychoice. Thus, there was nothing wrong with imposing a penalty onboth the corporation and Mr. S.The inflexible stand taken by the Court seems unjustified inlight of such fundamental principles of sentencing asproportionality and reasonableness of sanctions; cumulation ofsanctions can lead to unreasonable hardship which should be takeninto consideration in sentencing. 355 The Finnish proposal is354. Supra 268.355. The collateral effect of conviction and sentence was takeninto account in R. v. Ruddock (1978), 39 C.C.C.(2d) 65(N.S.S.C.App.Div.).151somewhat better endowed in this respect; section 9 provides thecourt with the possibility to reduce the corporate fine to anequitable amount when the offender is an unincorporated privateentrepreneur. For some reason, other small businesses are notcovered by the provision. Truly equal treatment of defendantswould clearly require the provision to be extended to all formsof small entities. Sanctions Although the establishment of liability is the necessaryprerequisite for sentencing, "sanctions are really the tail thatwags the dog of corporate criminal liability." 356 Success inprosecution is generally measured through the sanctions imposed;if the establishment of liability is not followed by anappropriate sentence, efforts to control corporate behaviourthrough criminal action have been futile. The norm-strengtheningeffect of the law is therefore strongly dependent on adequatesanctions.In order to have norm-strengthening impact, the sanctionmust carry negative or unpleasant consequences for the offender.With regard to corporations, such consequences can be achieved byaffecting the corporation's ability to achieve its goals,the most prominent of which is profit. The corporation's profit-making abilities can be strained through several differentmeasures. One of them consists of making the illegal activityunprofitable through severe economic sanctions. Hence,356. Hanna, supra 36 at 468.152the penalties imposed should...exceed the cost of compliance. Onlythrough compliance with the law, and the duties it imposes, willrespect for the law be encouraged and negligence in operationsdeterred. 357Both in Canada and in Finland, this aspect of sentencing isemphasized strongly. The chosen tool is the fine. In Canada, thefine is by far the most important penalty provided inenvironmental statutes. In Finland, the monopoly of the fine iseven stronger - it is the only penalty included in the proposedlaw on corporate criminal liability. Unfortunately, this strongreliance on the fine is not without some serious shortcomings.For one thing, the Canadian experience shows that the finesimposed have generally been too low to have any real impact oncorporate behaviour. Even when the maximum penalties provided inthe statute are rigorous, sentencing judges often apply anassortment of mitigating factors varying from the offender'seconomic contributions to the lack of concrete harm with such avigour that the resulting fine is a mere token.Simply raising fines, however, does not provide a fullsolution. Vast number of polluters who come to trial are smallbusinesses with limited ability to pay. 358 Due to economics ofscale, severe monetary penalties can end up being crippling orvindictive to a small corporation while being a mere slap on thewrist to a big company. Such different consequences do not meetthe requirement of equal treatment of offenders. Obviously then,the fine is a notoriously ineffective sanction in cases ofinability to pay or extreme wealth.357. R. v. Northwest Territories Power Corp., supra 114 at 61.358. Sentencing in Environmental Cases, supra 127 at 25.153It has also been argued that the impact of higher fines willnot be felt by the corporation but by its shareholders, employeesor consumers. 359 The critics of big fines talk about the problemof "spilling over" or "passing on". American legal scholar JohnCoffee has noted that "when the corporation catches a cold,someone else sneezes.“ 360It is self-evident that a fair and just sentencing systemsanctions only the actual offender without harming the innocentin form of lower dividend, higher prices, or lost jobs. However,the problem may not be as serious as it looks; for instance, itcan be argued that the shareholders have taken a voluntary riskby investing in a company with suspect environmental policies.Severe financial losses may convince the shareholders to transfertheir investments to a company with better environmentalpolicies. Furthermore, shareholders generally belong to thewealthier section of society or are corporations themselves andcan bear the loss. The concern for consumers is similarlyexaggerated; in market economy where monopolies are supposed tobe scarce, consumers can usually find lower prices from law-abiding companies.The concern over employees is, however, often real;employees are rarely in the position to pick their employer,359. See, for example, Criminal Responsibility for Group Action,supra 98 at 42; Iseman, supra 350 at 64-75.360. John Coffee, Corporate Crime and Punishment: A Non-ChicagoView of the Economics of Criminal Sanctions. (1980) 17 AmericanCriminal Law Review 419 at 421. See also, Coffee, Making thePunishment Fit the Corporation: The Problems of Finding anOptimal Corporation Criminal Sanction. (1980) 1 Northern IllinoisUniversity Law Review 3.154especially if the company is located in a small, remotecommunity. In such cases, the loss of a major employer can causedrastic problems, and a degree of restraint must be used whenusing fines against corporate offenders.An important aspect to hurting corporate profits throughsevere economic sanctions is the need to deprive the offender ofthe fruits of the crime. If the penalty imposed is smaller orequivalent to the savings or gain derived from the offence, thesituation presents the corporation with an attractive gamble. Inorder to have any norm-strengthening impact, the penalty mustexceed the illicit benefit by some significant amount.In Canada, the fine is the primary measure used fordepriving the offender of illegal profits. The majority of legalopinion seems to support the idea that "the fruits of the crime"have to be deprived from the offender through heavy fines. Inpractice, depriving the profits has been a pretty insignificantsentencing factor with the result that complying with thelegislation has often been more expensive than paying the fine.The "additional fine" provisions provided in some recentenvironmental statutes may improve the situation. 361 In Finland,in principle, forfeiture of profits is obligatory. Yet, since thecourts have based their estimate about the amount of profits onthe defendant's plead, forfeiture orders have generally been verylenient. Obviously, more effective measures must be employed togather evidence about the amount of profits.361. CEPA, supra 13, s. 129; Manitoba Environment Act, supra 22,s. 36(d); Ontario Environmental Protection Act, supra 22, s.146(c) (as am. 1986, c. 68, s. 15).155In addition to economic deprivation, corporate behaviour canbe influenced by stigmatizing the corporate image. Imposition ofa penal sanction carries a negative stigma by its very nature.The norm-strengthening stigma of penal sanctions is stronglyconnected to society's reproach expressed through a penalty. Theeffectiveness of the reproach is dependent on publicity thatfollows the conviction. Public denunciation can be of particularsignificance with regard to corporations who generally try theirbest to keep up a good public image. The Canadian legislator haswanted to optimize the negative impact of publicity by providingsome of the most recent environmental statutes with a provisionthat empowers the courts to order the convicted offender topublish the facts of the case. 362 Formal publicity was advocatedalso by the Finnish Penal Code Task Force, but it was left out ofthe final version of the proposal.While the Canadian courts and legal scholars have widelyacknowledged "the inadequacy of existing remedies, which consistalmost entirely of fines, and the need to fashion moreappropriate remedies", 363 and have made attempts to usepublicity, additional fine, or remedial orders against corporateoffenders, the Finnish Criminal Law Committee has emphasized theobjective of a clear and simple sentencing system by keeping thenumber of penal sanctions low. 364 This aim of clarity shows as a362. CEPA, supra 13, s. 130(1); Fisheries Act, supra 14, s.79.2(c) (as am. S.C. 1991, c. 1).363. John Sweigen, "Sentencing in Environmental Cases: A Viewfrom the Bar" in Environmental Enforcement, supra 82 at 99. Seealso, Sentencing in Environmental Cases, supra 127 at 71; R. v.Gulf Canada Corp., supra 160; R. v. Panarctic Oils, supra 124.364. Criminal Law Committee Report, supra 299 at 65.156pretty empty selection of sentencing options. As the discussionabove shows, the fine is not always the most appropriate measurewhen sentencing corporate offenders. The Canadian experimentswith publicity and other alternative penalties might provide someideas for supplementing the fine with alternative options.As mentioned earlier, the norm-strengthening impact of thelaw is greatly dependent on the degree people feel the system isjust and equitable in its treatment of those involved. Therequirement of justice is of particular importance in sentencingbecause penal sanctions violate such fundamental rights aspersonal liberty and financial security. Therefore, once thequality of the penalty is established, its quantity must bedetermined so that the result is fair and equitable. In otherwords, the sanction should be no more or less than the offenderdeserves. This notion of "just deserts" has led to the principleof proportionality. The principle consists of two aspects; firstof all, the penalty must be in proportion to the gravity of theoffence and the culpability of the offender. Secondly, theprinciple requires similar treatment for similar offences. 365In Finland, the principle of proportionality is included inthe Penal Code, and it is recognized as the leading sentencingcriteria. In Canada, in spite of the fact that the legalliterature frequently brings up the principle as the mostimportant sentencing criteria, the practice shows that theprinciple is often neglected or muddled with other criteria. 366365. See, von Hirsch, supra 132.366. For instance, in The Criminal Law in Canadian Society "theneed for sentences to reflect, above all, the seriousness of the157Sentences have only mildly reflected the gravity of the offence,particularly so if no evidence of concrete harm has beenavailable. Similarly, the culpability factor has generally workedonly for the offender; the lack of guilty mind in strictliability offences is often regarded as a mitigating factor inspite of the fact that it is submitted that mens rea is not evenan element of a strict liability offence. Furthermore, suchexternal factors as "corporate character" or the corporation'ssocioeconomic significance have often outweighed otherconsiderations.4.1.2. Redress to the Victim and the EnvironmentIn the previous section, I have discussed the norm-strengthening impact of sanctions. There is, however, more tosanctions than merely reaffirming the broken norms. For thevictim of the crime, sanctions mean a way to satisfy his mentalor financial grievances. And from the viewpoint of the naturalenvironment, sanctions should provide for cleaning up andmitigation of damages. If asked the victims of a toxic spill, afisherman who has suffered a loss of income, or a summer cabinowner who can no longer swim in his lake, it is hardly revenge oreven deterrence that is the foremost concern in their minds, butreparation of damage and compensation. For the victim and theharm involved in the criminal conduct, and the degree ofculpability of the offender" was strongly underlined. Similarly,the report noted that "special attention [must be] devoted toensuring similarity of treatment for persons who are alike inrelevant respects". Supra 1 at 61, 64. See also SentencingReform, supra 118 at 152.158environment, equilibrium becomes restored only throughappropriate sanctions that remedy the wrong caused through theoffence.Whether redress should be obtained through penal sanctionsor by some other measures remains a controversial issue. Both inCanada and Finland, criminal courts have traditionally paid onlylittle attention to redress when determining an appropriatesentence. Compensating the victim has been regarded as afundamental part of the civil procedure, and restoration of thedamaged site has been left to administrative officials. InCanada, however, the strict division between penal and otherforms of sanctions has subsided, at least in theory, after thevictim orientated approach started to gain more ground in the1970s. One strong supporter of the approach has been the CanadianLaw Reform Commission who on several occasions has recommendedincorporation of restitution and compensation into sentencingalternatives. 367In some instances, the recommendations have led tolegislative action; the CEPA provides compensation for the lossof property, 368 and the Manitoba Environment Act empowers courtsto order the offender to pay damages or make restitution. 369Compensation and restitution can also be granted under so calledremedial order provisions provided in some environmental statutesor as a condition of a probation order under the Criminal367. Restitution and Compensation and Fines, supra 169 at 5-8;Sentencing in Environmental Cases, supra 127 at 69.368. Supra 13, s. 131(1).369. Supra 22, s. 36(c).159Code. 370 It must be noted, however, that an order to pay damagesor restore the damaged site can only be made in addition to apenalty. For instance, the Criminal Code provision on probationspecifically denotes that the objective of a probation order mustbe to secure the good conduct of the defendant or prevent himfrom further offences, not punishment.In sentencing practice the redress remains a rarity. TheCanadian courts have been reluctant to order compensation orrestitution claiming that they do not want to turn into"collection agencies", and perform complex monetary calculationsconnected to compensation and restitution. Yet, the same courtsare able to handle such complicated matters as tax frauds andother economic crime which often involve huge sums of money.In Finland, the desire to keep penal sanctions separate fromcivil and administrative sanctions has remained strong. Forinstance, only administrative officials have powers to ordercleaning up or restoration of the damaged site. A significantexception to the separation of procedures is the possibility ofpresenting a compensation claim in criminal proceedings when theclaim is based on an injury caused by the crime in question. Suchadhesive proceedings mean procedural economy because the twocases are combined in one, thus decreasing the amount of judicialand administrative work and time. However, joint procedure doesnot necessarily improve the victim's rights to receivecompensation. For one thing, it is up to him to take the370. Supra 17,^s. 737 as am.; Fisheries Act, supra 14, s. 79.2(b) (as am. S.C. 1991,^c.^1) ; Ontario Environment ProtectionAct, supra 22,^s. 146d(1).160initiative about the claim, not the prosecutor. Also, since thecompensation order imposed is regarded as a civil sanction,securing payment of damages is a matter for the victim. ,Furthermore, since the civil claim is ancillary to the penalclaim, it is possible that the civil claim will not be consideredto its full extent. 371When addressing the question of redress in criminalsentencing, we run into the fundamental issue about the properfunctions of penal sanctions. As the discussion above reveals,the limits of these functions have been somewhat differentlydrawn in Canada and Finland. At least in theory, the Canadiansystem has paid more attention to the matters concerning redress.The selection of penal sanctions includes a variety of measuresthrough which the victim can be compensated or the damaged sitecan be restored. The measures are non-punitive by nature; theirfunction is not to punish but to compensate and restore, and theycan be imposed only in addition to a penalty. Hence, punitivesanctions (normally a fine) and other sanctions are kept strictlyseparate. A similar separation of functions takes place also inthe Finnish sentencing system with regard to forfeiture. Althoughan integral part of sentencing, neither forfeiture of profits orproperty is regarded as a penalty but as so called "supplementarysanction" the purpose of which is to prevent further offences.Hence, in both systems, the functions of penal sanctionshave expanded from purely punitive to compensatory and preventivefunctions, from punishment to obligations. This enlarged role of371. See Joutsen, supra 291 at 193-95.161penal sanctions raises some points worth considering. For onething, by including compensation and remedial sanctions amongpenal sanctions, the justice system emphasizes the importance ofthese issues. Criminal process is likely to bring increasedattention to the harm done to the victim and the environment aswell as to the need to remedy the harm. After all, "criminalprocess has an inherent theatricality" which attracts mediacoverage in a lot higher degree than administrative or civilproceedings do. 372Secondly, including compensatory and remedial restitution tocriminal proceedings would reduce the duplicate (or triplicate)actions of civil and criminal (and administrative) proceedingsand save both time and money. Also, when the victim is a privatecitizen with limited assets, bringing an action for damages isoften not done for variety of reasons such as high expenses orbelief that a "small guy" cannot win when the opponent is a bigand powerful corporation. Sweigen and Bunt have noted that"[t]the alternative to recovery through the sentencing process isnot recovery through the civil process, but no recovery atall." 373 Thus, it can be argued that empowering the prosecutionto claim damages or restitution would mean improved protectionfor the rights of the victim.Although the present Finnish system of adhesive proceedingsdoubtless increases the efficiency of the sanctioning systemthereby lessening the concern over human crime victims,372. Coffee, Making the Punishment Fit the Corporation, supra 360at 22.373. Sentencing in Environmental Cases, supra 127 at 69.162redressing the damaged environment is completely excluded fromcriminal proceedings. Concurrently, it is evident that the finealone is not always a suitable sanction. The wider variety ofremedial sanctions available for a Canadian sentencing court mayoffer more innovative sanctioning alternatives for corporateoffenders. At least restitution in the form of community serviceor cleaning up the site would appear appropriate for thosecorporate offenders with whom the fine is for some reason aninappropriate or insufficient penalty. The Finnish EnvironmentalOffences Committee also pointed out that including remedialorders into the criminal process would provide increased legalsecurity compared to the present administrative procedure. 3744.2. Maintaining PredictabilityThe first part of this chapter was devoted to examining theCanadian experience and the Finnish law proposal in the light ofthe first social function of law, that of restoring equilibriumto the social order. In this part, I shall examine the secondsocial function of law which contributes to the social order bymaintaining predictability in the lives of people.374. Environmental Offences Committee, supra 299 at 169-78.Remedial orders have also been under extensive study in Sweden,see, Miljdkostnader. Miljdn i samhallsekonomin, kostnadslag,kostnadsfOrdelning, styrmedel. Betankande av utredningen omkostnaderna for miljavdrden. Statens Offentliga Utredningar (SOU)1978:43; Battre miljOskydd II. Slutbetankande avmiljOskyddutredningen. Statens Offentliga Utredningar (SOU)1983:20.163Law serves as a means to protect normal expectations and itenables people to act more efficiently by allowing them tocalculate the legal consequences of their actions. Obviously, ifpeople had no guarantees about the safety or security of theirconduct, there would be no development and progress would perish.A meaningful degree of certainty about the content of law is alsoan important element of compliance. A law that is ambiguous orrandom invokes distrust and lack of respect for the law and thewhole legal system thereby encouraging non-compliance. Therefore,predictability is an important part of any successful compliancestrategy. 375Maintaining predictability requires the law to be exactenough to allow a meaningful degree of certainty. For one thing,the rules of the law must be of sufficient precision. Withcorporate criminal liability, this means both knowledge about theconditions for liability and certainty about sentencing.Corporations must be made aware of how, when, and on what basisthey can be made liable for their activities. Similarly, theyneed to have an idea of existing sentencing factors andsentencing options.Exact rules on liability and sentencing do not aloneguarantee a sufficient degree of predictability, but they must besupported with consistent and uniform enforcement. The disparitybetween the rules of law and the law in practice inserts a degreeof uncertainty into the process. Therefore, enforcement has asignificant role in drawing the limits of acceptable corporate375. Berman - Greiner, supra 25 at 32.164conduct. 376 How well the Canadian and the Finnish approaches meetthese different aspects of predictability will be looked at next.4.2.1. Precise Rules of LiabilityIn Canada, the rules and principles on corporate criminalliability have developed over a period of more than one hundredyears. The majority of rules are still based on case law, themost important case being R. v. Canadian Dredge & Dock Co. from1985. 377 Although the decision nicely codified and clarified thelimits of corporate liability, the rules themselves do not alwayspromote predictability. An example of such a rule is theidentification theory which focuses solely on the directingmind's guilty mind, and automatically imputes the individual'sintent to the corporation. Since the corporation's efforts toprevent criminal conduct are irrelevant and it has no way ofpredicting and controlling its own destiny, it has no incentiveto make efforts to develop responsible corporate policies. 378In the Finnish system corporate liability depends not on theconduct of its individual members but on the corporation'sefforts to promote compliance. Since the corporation knows thatits liability will depend on its own voluntary acts "it canbetter plan and predict its future fate by choosing whether to376. See Trezise, supra 332 at 404.377. Supra 36.378. See generally, Pamela Bucy, Corporate Ethos: A Standard forImposing Corporate Criminal Liability. (1991) 75 Minnesota LawReview 1095 at 1104-05, 1113.165engage in activities that limit - or expand - its exposure tocriminal liability." 379Although in Canada the general principles of corporatecriminal liability can be found in case law, some rules ofliability have been retained and further clarified in statutorylaw. For instance, the proposed recodification of the CriminalCode includes specific provisions about corporate criminalliability. 38° Also some environmental statutes codify or furtherspecify liability rules. These statutory provisions are notalways consistent with each other. For instance, while mostenvironmental statutes support the common law rule that theconviction of the directing mind requires mens rea from theindividual even when the offence is one of strict liability,Ontario's environmental statutes have adopted a differentapproach according to which the Crown does not need to prove mensrea but a mere negligent omission to prevent the corporation fromcausing or permitting pollution is enough. 381 Similarinconsistencies appear with regard to the question of whetherconvicting the corporation is a prerequisite for convictingcompany directors. Environmental statutes provide both positiveand negative answers to the question with the majority of thestatutes not dealing with the question at al1. 382 These kind of379. Ibid. at 1113.380. The revised Code would, however, be applicable only tocrimes punishable by a term of imprisonment.381. Compare, for example, CEPA, supra 13, s. 122; Transportationof Dangerous Goods Act, supra 16, s. 11; B.C. Waste ManagementAct, supra 51, s. 34(10) with Ontario Environmental ProtectionAct, supra 22, s. 147a (as am. S.O. 1988, c. 54, s. 49(3)).382. Compare, for example, B.C. Environment Management Act, supra100, s. 14(4) with CEPA, ibid.166disparities in legislation create situations in whichcorporations (or corporate directors) are set in differentpositions depending on the province they operate in. Such diverselegislation does not advance the public's awareness about thecontents of the law thereby enhancing unpredictability anduncertainty.The Finnish law proposal on corporate criminal liability isdrafted in a relatively detailed manner. The Task Force justifiedspecific and detailed provisions by the radical change corporatecriminal liability will bring into the Finnish legal system. TheTask Force noted that such a fundamental alteration is certain toraise insecurity among the legal profession, and ambivalent andabstract provisions could lead to even more uncertainty andincoherent legal practice.Although the Task Force's point is certainly relevant, itmust be kept in mind that while casuistic definitions have astronger guiding effect, they might carry the risk of saying toomuch of one thing (and nothing of other things). In fact, this isexactly what appears to have happened with the proposal. In itsambition to formulate clear and precise rules, the Task Force hasgone too far in details regulating matters that are self-evidentwhile leaving some essential questions wide open. An example of aself-evident provision is the requirement of causality stated insection 3. According to the section, there must be a causalconnection between the commission of an offence and the corporatebreach of duty. The requirement of causality is, however, one ofthe basic principles of the Finnish criminal law doctrine and167hence, there is no particular need to specifically articulate therequirement. The proposal also provides for long, casuistic listsin sections 6 (sentencing criteria) and 7 and 8 (waiving ofmeasures). Such lists could be included on the commentary of theproposal thereby relieving the law itself from long and tiresomelists. 383While some issues are over-regulated in the proposal, othershave not been regulated at all. For instance, the applicabilityof the law to foreign corporations operating in Finland is notdefined in the proposal or anywhere else in criminal law.Similarly, the proposal does not address the questions about theeffects of a dissolution or amalgamation to corporate liability.4.2.2. Clear Sentencing SystemWhen studying the Canadian experience on penalizingcorporations for environmental offences, some of the greatestproblems appear to be connected to sentencing. The vast diversityof environmental offences and offenders has led to a situation inwhich "[t]here is no consensus on the appropriate sentencingprinciples or the factors to be taken into account in thesentencing and the relevant weight to be given differentprinciples or factors" .384It is generally acknowledged that sentencing inenvironmental cases requires a special approach different from383. See, Oikeushenkildn rangaistusvastuu, the Report by theCommission for the Examination of Legislation, supra 24 at 6, 15,19-20.384. Sentencing in Environmental Cases, supra 127 at 6.168that used in traditional crime, but what this "special approach"consists of remains an open issue. 385 The sentencing practicereflects ambivalence even about the sentencing objectives and ,principles. Deterrence is cited as the primary objective in mostenvironmental cases, but in reality, retributive undertones canbe found in many sentencing decisions. At least on a theoreticallevel, deterrence and retribution are often contrasted with eachother so that the court must choose either or. This uncertaintyabout the proper purposes of sentencing is reflected insentencing factors. For example, if the sentencing judge wants toemphasize deterrence, he wants to impose a substantial penaltyeven in the absence of actual damage. Meanwhile, a "retributive"judge supports the principle of proportionality and refuses topunish the offender for something that cannot be proved.The confusion over sentencing factors is further accentuatedby the very nature of environmental offences. Most environmentaloffences are by-products of otherwise useful and sociallyacceptable operations. Consequently, the courts have broughtabout a variety of factors that underline the economic welfareprovided by the offender or the offender's good behaviour in thepast. As a result, too much emphasis has been cast on matters ofmarginal relevancy and the focus of attention has drifted fromthe harm sought to be prevented in the statute to suchtrivialities as "good corporate character".Since no articulated policies about sentencing principles orfactors are provided, the uniformity of sentencing suffers. The385. R. v. Kenaston Drilling (Arctic) Ltd., supra 146.169results of the haphazard sentencing practice show in widediscrepancy in the fines imposed. Present practice provides noguidance to sentencing judges who can apply practically anyprinciples and factors and impose a penalty of any size. Such asystem is naturally not capable of promoting predictability andcorporate awareness about environmental sentencing.In Finland, criminal justice system is very legalisticallyregulated, and the discretion of the judicial bodies imposingpenal sanctions has traditionally been restricted. 386 Forexample, the maximum penalty for each type of offence is alwaysexpressly stated in law. This legalistic approach shows asprecise sentencing criteria. The Penal Code includes generalsentencing criteria applicable to all crimes. In the proposed lawon corporate criminal liability, these general criteria aresupplemented by specific criteria provided in section 6. In fact,the Task Force has succeeded in its ambition for preciseness sowell that the section can be criticized for being overlycasuistic.The most important general sentencing criterion is theprinciple of proportionality which requires the penalty to be injust proportion to the culpability of the offender and the harmcaused by the offence. In addition to promoting fair sentences,the principle promotes predictability by setting the basis fordecision-making in sentencing. By dictating that the decisivefactors are the harm and the intent, the principle equips the386. Historical perspectives of the Finnish legality principleare discussed in Raimo Lahti, On Finnish and ScandinavianCriminal Policy. 1989 Cahiers de Defence Sociale at 64.170courts with clear instructions, and excluding factors of marginalrelevancy becomes easier.With regard to sentencing options, the Task Force hasoptimized predictability by providing only one penalty, that of acorporate fine. Such useful measures as revocation of licences orremedial orders are strictly limited to administrative officials.As we have seen above, the fine is not always the best possiblesentencing tool against corporate offenders, especially inenvironmental offences which involve a vast diversity of offencesand offenders. Obviously, "a broader range of penalties and a. wider variety of sentencing tools must be fashioned to reflectthe wide range of offenders and offences contemplated byenvironmental laws". 387 A wider selection calls for cleararticulation of the sentencing goals and relationships betweenthe various sentencing options. This requires evaluation of therelative seriousness of the various offences and rationalizationof sentencing criteria relevant to environmental offences. Asystem that is clearly structured and consistent provides groundsfor more diverse sentencing options, contributing both topredictability and flexibility of the system.4.2.3. Consistent and Uniform EnforcementThe requirement for predictability in enforcement isspecifically expressed in the CEPA's compliance and enforcementpolicy, which states that "[e]nforcement officials throughoutCanada will apply the Act in a manner that is fair, predictable,387. Sentencing in Environmental Cases, supra 127 at 7,171and consistent." 388 The Canadian reality, however, is far fromthis ideal due to the exercise of wide prosecutorial discretion.The formal exercise of prosecutorial discretion is exercisedat the executive level of individual regulatory agencies so thatin most jurisdictions, the final decision to prosecute is made bythe deputy minister of the relevant department although advice onthe legal merits is normally sought first from the AttorneyGenera1. 389 Lynne Huestis has studied prosecutorial discretion inenvironmental cases, and has made several interesting findingsabout the present practice which she describes as selectiveenforcement. She notes, firstly, that detected violations areonly rarely prosecuted. She then moves on looking at factors thatinfluence the execution of prosecutorial discretion, andconcludes that "factors not technically relevant to statutory lawsubstantially influence the enforcement of law". 39° For example,the concept of harm, which is generally the basic rationale forgovernment intervention, has only secondary influence on thedecisions to prosecute. At the same time, a variety of "sociallyrelevant attributes" such as the mental state of the offender,the offender's past compliance record and general "attitude" ofthe offenders are important factors in prosecutionarydiscretion. 391 She has also pointed out that the fact thatprosecutorial discretion is formally in the hands of a regulatory388. Canadian Environmental Protection Act, Enforcement andCompliance Policy, supra 8 at 9.389. Chappell, supra 334 at 35.390. Lynne Huestis, "Charter of Rights Implications in Discretio-nary Enforcement" in Environmental Enforcement, supra 82 at 25.391. Ibid. at 25-26.172agency "raises the possibility of political considerations in thefinal decision to prosecute". 392Huestis notes that selective enforcement is not reflected inthe legislation but is based almost entirely on the discretion ofan enforcement agency. According to her, this has led to asituation in which[s]tatutes take on the appearance of "paper tigers", withenforcement sporadic and without apparent consistency. Illegalnoncompliance is not uniformly prosecuted. Enforcement decisionsare within the framework of closed and secretive process withinthe agencies. As a consequence, the enforcement strategies andprosecutorial criteria relied on by the agency are not readilyapparent to either regulated industry or the public. 393While prosecutorial discretion provides an important degreeof flexibility in the criminal justice system, inconsistentenforcement creates uncertainty and unpredictability which mayhave a negative impact on corporate compliance. If corporationsperceive that the chances of prosecution are small, violatinglegislation might become a gamble with a good chance to win.Inconsistent enforcement raises also a question about thefairness of such a system. Huestis notes that "discretion attainslegitimacy only when it is generally perceived to be appropriatein the circumstances." 394 Since the decisions to prosecute havelow visibility, it becomes difficult to identify theappropriateness of the criteria used in decision-making.392. Lynne Huestis, Policing Pollution: The Prosecution ofEnvironmental Offences. Law Reform Commission of Canada WorkingPaper, Protection of Life Series, Ottawa 1984 (unpublished) at45, quoted in Chappell, supra 334 at 35.393. Huestis, supra 390 at 26.394. Ibid. at 27.173In Finland, the legality principle is observed also inprosecution. Research suggests that there is very little room fordiscretion in prosecutorial decision-making. 395 The impact oflimited discretion is emphasized by the fact that the applicationof the proposed law on corporate criminal liability is madeobligatory. Originally, the Task Force proposed discretionaryapplication of the law, but the final version of the proposal isbased on compulsory application whenever the criteria forcorporate liability exists.The strictness of compulsory application is mitigated by theprovisions on waiving of measures. Waiving of measures can bedone at three stages of the process; the police or otherenforcement agency may refrain from reporting the offence, theprosecutor may refrain from laying charges, and the court mayrefrain from imposing a penalty. The general basis for thedecision to waive measures is the pettiness of the offence.According to section 7 of the proposal, a police may refrainfrom reporting an offence if it is obvious that the prosecutorwill refrain from laying charges. In its report, the Commissionfor the Examination of Legislation notes that providing thepolice with a power to waive measures means in practice that thepolice must anticipate the prosecutor's decision. Such a power isnot appropriate considering that the law is meant to apply only395. This result was obtained in an international comparativestudy based on summarized case prosecutions. See, Matti Joutsen -Jorma Kalske, Prosecutorial Decision-Making in Finland. TheResults of a Simulation Study. (Helsinki: National ResearchInstitute of Legal Policy, 1984), publication 67.174to relatively serious offences. The seriousness of the offenceshould be left to the prosecutor to decide.Although the discretionary powers with regard to prosecutionhave been little used in traditional crimes, there is a reason tobelieve that prosecutors might use more discretion with corporateoffences. One contributing factor is the heavy onus set on theprosecution. Also, environmental cases often involve difficultscientific and technical issues which prosecutors are notaccustomed to. A solution is to form a separate prosecutor'soffice for environmental offences or to ease the burden of proofon the prosecutor. Without such measures, waiving of prosecutionmight become a rule instead of an exception.4.3. Creating Environmental ResponsibilityIn the first part of this chapter I discussed the norm-strengthening function of the law, and evaluated its role incontrolling corporate environmental behaviour. In his book "WhyPeople Obey the Law", Tom Tyler identifies the norm-strengtheningaspects of the law with a so called instrumental perspective tocompliance. 396 According to Tyler, the instrumental perspectiveis based on shaping peoples' behaviour through a system ofincentives and penalties, and is strongly connected to theideology of deterrence. Such a system is built on the pursuit ofself-interest. For example, a possibility of prosecution forcesthe company to make judgements about possible gains and losses396. (Chelsea: Yale University Press, 1990), at 3.175resulting, on one hand, from law-obedient behaviour, and on theother hand, from breaching the norms.Whilst the instrumental perspective to compliance is widelyadopted among policy makers, it is also possible to promotevalues and enhance compliance by makingpeople view compliance with the law as appropriate because oftheir attitudes about how they should behave [so that] they willvoluntarily assume the obligation to follow legal rules [because]they feel personally committed to obeying the law irrespective ofwhether they risk punishment for breaking the law. 397Tyler calls such voluntary compliance a normative commitment tothe law. Unlike the instrumental perspective which makes peoplecomply because of external pressures, the normative perspectiveaims at a voluntary, inner commitment to comply. The followingpresentation is devoted to exploring this normative perspectiveto compliance. The presentation starts by introducing the conceptin more detail and then discussing its application to corporateenvironmental behaviour.4.3.1. The Normative Perspective to ComplianceIn its traditional form, law reflects the values of thesociety in which it functions. However, sometimes law must domore than that; it must anticipate future developments, leapahead, and set new values and new standards of conduct, andthereby mold and advance the moral and social attitudes of thepublic in order to cope with emerging social problems. 398397. Ibid. at 3.398. Berman - Greiner, supra 25 at 33.176With regard to the topic of this thesis, the "emergingsocial problem" lies in the lack of corporations' environmentalresponsibility which results in non-compliance with environmentallegislation. As noted above, one way to encourage compliance isthrough a system of penalties and rewards. Although thisinstrumental perspective is widely adopted by policy makers, itsapplication is not entirely without problems. Tyler notes that(allthough the idea of exercising authority through social controlis attractively simple, it has been widely suggested that indemocratic societies the legal system cannot function if it caninfluence people only by manipulating rewards and costs...Thistype of leadership is impractical because government is obliged toproduce benefits or exercise coercion every time it seeks toinfluence citizens' behaviour. These strategies consume largeamounts of public resources and such societies would be "inconstant peril of disequilibrium and instability". 399For these reasons, Tyler advocates supplementing the instrumentalperspective with normative commitment to the law. The keydifference between the two perspectives is that a system built onthe normative perspective attempts to enhance people's innercommitment to comply, while a system based on the instrumentalperspective compliance is based on considerations of reward andpunishment. 400 A normatively committed person complies with thelaw because he feels the law is just and moral, not because hefeels it is in his best self-interest to comply.The normative perspective is built on the suggestion thatpeople will voluntarily act against their self-interest. Tylertalks about "internalized obligations" which are so strong thatthey replace self-interests as the primary consideration in a399. Supra 396 at 22.400. Ibid. at 24.177person's mind. 401 Imposing such internalized obligations tocorporations through corporate criminal liability will be lookedat next.4.3.2. Corporations and "Internalized Obligations"David Trezise has noted that "[a] primary cause of ourcontemporary environmental problems is the tacit pre-eminenceaccorded the right to despoil the environment over the right to aclean environment."402 This pre-eminence is strongly founded onthe fact that pollution is largely a result of otherwiselegitimate and socially desirable corporate activities. Thecorporation is an instrument designed to make profit, andtherefore to override other values, such as environmentalprotection, that conflict with the goal of maximizing profit. Thesuccess of some corporations in achieving their goals unlawfullyencourages others to follow the same path to success. The absenceof normative support for legitimate conduct is replaced bynormative support for the illegitimate, but expedient. Non-compliance becomes "acceptable business practice". 403The aim of the normative, educative function of the law isto turn such "acceptable business practices" unacceptable byconvincing corporations into compliance not from force, butbecause they have adopted internal cultures that reflect theideology of environmental protection. Creating a responsible401. Ibid.402. Trezise, supra 332 at 405.403. Dianne Vaughan, Toward Understanding Unlawful OrganizationalBehaviour. (1982) 80 Michigan Law Review 1377 at 1385.178corporate culture must be the foremost goal in any successfulcompliance strategy; convicting a corporation is not much good ifsufficient internal pressure to violate the law continues toexist within the corporation. Only a change in the corporateattitude towards compliance will actuate real change.Since a corporation itself is a "mindless" entity, theprocess of internalizing environmental obligations must takeplace through individuals who in turn can promote the developmentof corporate culture and influence corporate decision-making. Inaddition to corporate management, investors, corporate employeesand customers can have significant influence on forming aresponsible corporate culture. When the number of investorsrefusing to invest in companies with environmentally suspectpolicies has grown big enough, or when the majority of customersdemand "green" products, environmental policies of manycorporations are likely to change. Therefore, although I talkabout creating environmental responsibility in corporations, onthe practical level, this third function of corporate criminalliability is based on molding and advancing the environmentalconsciousness of private individuals.Obviously, no law alone can accomplish the formidable taskof internalizing environmental obligations, but a variety ofmeasures of social control must be employed. 404 Nevertheless,criminal liability and criminal sanctions can have a significantinput to the process of internalizing environmental obligations404. See, Christopher Stone, When the Law Ends: The SocialControl of Corporate Behaviour. (New York: Harper & Row, 1975).179if properly applied. After all, the global purpose of criminallaw is to support and endorse fundamental values of our societyby penalizing their breach, and since criminal measures are oftenregarded as the last resort, reliance on such measures carries adefinite authoritative stigma.The authoritative stigma attached to criminal law is,however, quite vulnerable and can wear off. In order to retainits stigma, the law must, above all, appear just and legitimateto the public. 405 Justness and legitimacy require such legalsafeguards as proportionality, equality, and predictability, anddemand the law to be reasonable and fair in its treatment ofthose involved. Giving special treatment to governmentcorporations or excluding partnerships and other unincorporatedentities from liability on purely technical grounds is notlikely to enhance the public's perception about the legitimacy ofthe law. Similarly, a random and inconsistent sentencing systemwith a confusion about objectives and principles hardly meets therequirements of predictability or equality.A further important aspect of legitimacy is thatcorporations should not be liable for something over which theyhave no control. Only voluntary engagement in lawless activityshould be penalized. 406 As I pointed out earlier, the presentCanadian approach to mens rea offences totally ignores thecorporation's efforts to comply with legislation. Hence, nodistinction is made between good and bad corporations. A more405. See Tyler, supra 396 at 20. See also, Hart, supra 337 at 50.406. Hart, ibid. at 181-82.180equitable approach is that adopted by the Finnish legislator;according to the proposed law on corporate criminal liability, acorporation is liable only if it has breached its duty to enforceand implement laws and regulations internally. The standardpromotes the legitimacy of the system by penalizing onlycorporations who "deserve" the punishment, and rewardingcorporations who make efforts to promote compliance.To some degree, the requirement of legitimacy is also linkedto tangible remedies for self-interested parties. 407 Inadequateor insufficient sanctions can do more harm than good in that theyfoster contempt for law in general, and tend to encourage theviolations which they are intended to prevent. 408 In Canada,although both the selection of different sentencing options aswell as high maximum fines provide a relatively good basis forimposing effective sanctions against corporate offenders, thesentencing practice shows that resultant sentences are often bothinsufficient to prevent further crimes, and do little to remedythe harm done to the victim or the environment.An explanation for low or inadequate penalties may lie inthe fact that the Canadian courts seem not to know whether totreat pollution as serious or not. Despite the presence of penalsanctions, the legal profession has traditionally viewed the vastmajority of environmental dictates as administrative rather thancriminal in quality. For instance, in R. v. Sault Ste. Marie the407. See Tyler, supra 396 at 164.408. Trezise, supra 332 at 404.181Supreme Court of Canada suggested that environmental offences arenot crimes but "public welfare offences". 409The fact that the motivations of those involved are oftenguided by economic rather than more sinister aims means thatsubstantial problems can arise when it is sought to label theseactivities as criminal or morally wrongful. Consequently, thecourts have pursued deterrence as their primary objective insentencing. Moral condemnation linked to retributive sentencingobjectives has been regarded as unnecessary due to the "morallyneutral" nature of environmental offences.Socioeconomic factors and political pressures are alsoreflected in the abundant use of mitigating factors. Some of thefactors have little relevance to the crime committed, and in manycases, the undercurrent of political and socioeconomic pressuresis evident. The problem is particularly eminent in smallcommunities where the jobs and tax revenues are crucial to theeconomic welfare of the community. Ross Howard has studied theillegal environmental practices of several Canadian companies,and has come to the conclusion that the government and judiciaryare greatly influenced by corporate economic power. Whenthreatened with a prosecution or harsh penalties, a company cansimply threaten to close down or cut back on needed jobs. Facedwith such threats, government and judiciary often back down anddo not prosecute or impose only marginal penalties. 410409. Supra 41.410. Ross Howard, Poisons in Public, Case Studies ofEnvironmental Pollution in Canada. (Toronto: James Lorrimer &Company, Publishers, 1980).182One-sided favoring of economics and corporations at theexpense of the environment and the public does not contribute toadvancing peoples' environmental awareness. One can hardly expectthe general public to regard environmentally harmful activitiesas criminal if even the courts hesitate in calling environmentaloffences crimes, or if they through frivolous sentences acceptthe non-compliance in the name of "economic good".For the victim of a crime, an important part of a fairoutcome includes a remedy for the harm done. Local citizens whohave lost a beautiful natural resort, or an environmental groupwho has seen the destruction of an ecologically valuable site canbe left feeling deprived if the only sanction imposed is thefine. The authority of law requires maintaining the public'sconfidence in the capacity of the state to protect the publicinterests. These interests include, in addition to the interestsof the state itself, also the interests of private individualsand groups. Therefore, full satisfaction of all parties requiresremedial and compensatory measures. Including such measures intothe penal system is one way of emphasizing environmental values,and thereby enhancing peoples' perception about the importance ofenvironmental protection.In addition to influencing the environmental thinking ofindividuals, remedial measures might also have a direct impact oncorporate environmental policy. The Canadian Law ReformCommission has noted that a remedial order "challenges theoffender to see the conflict in values between himself, the183victim, and society." 411 If a corporation was concretely made toface the harm done, it might learn more from the experience thanif it was imposed with a symbolic fine. Such an "invitation toreconciliation" does not isolate the offender from the societybut encourages positive participation for the common good.5. TOWARDS AN IDEAL: SOME SUGGESTIONS FOR THE IMPROVEMENT OF THELAW"National and international law has traditionally lagged behindevents. Today, legal regimes are rapidly outdistanced by theaccelerated pace and expanding scale of impacts on theenvironmental base of development. Human laws must be reformulatedto keep human activities in harmony with the unchanging anduniversal laws of nature." 412As the above quotation from the United Nations' report "OurCommon Future" notes, mankind has a responsibility to respond tothe challenges set by the degradation of the environment. Themost common response has been the composition of laws andregulations directing environmental matters from littering totoxic emissions. An assortment of strategies ranging fromeducation to penal sanctions has been employed to encouragecompliance with this legislation.Of all the important compliance strategies, in this work, Ihave concentrated on studying the application of penal measuresagainst corporate offenders in Canada and in Finland. Afterhaving introduced the two different approaches to corporate411. Restitution and Compensation and Fines, supra 169 at 7.412. World Commission on Environment and Development, Our CommonFuture. (New York: Oxford University Press, 1987) at 330.184criminal liability, I examined the Canadian experience and theFinnish law proposal in light of the social functions of law. Theevaluation revealed both strengths and weaknesses in the twosystems. In this chapter, I intend to utilize these findings andpursue to construct an improved framework for penalizingcorporate criminals in environmental cases. I do not attempt (andcannot due to the different legal systems of the two countries)to dictate a specific model of corporate criminal liability.Instead, this chapter is an endeavor to bring up some suggestionsof how the difficult task of "reformulating" this "human law"could be done.The chapter is divided into three parts, with the first partconcentrating on the construction of corporate liability. Thesecond part is devoted to building an efficiently workingsentencing system, and finally, the chapter finishes bysummarizing some of the conclusions arrived at in this thesis.5.1. Corporate LiabilitySince it is a fundamental principle of criminal law thatcriminal liability requires the existence of a culpable state ofmind, the first two sections are devoted to establishing fault ina corporate offence. This is followed by a short discussion aboutthe role of individual liability in a corporate context. Thequestion about liable entities is discussed in the final section.1855.1.1. The Basis for LiabilityThe two systems introduced in this work have a fundamentallydifferent approach to the question of imposing criminal liabilityon a corporate entity. In Canada, the identification doctrineimputes an individual agent's criminal act and intent to thecorporation because individual members of the corporation areregarded as the corporation. Meanwhile, the Finnish systemattempts to look beyond an individual agent; while finding aguilty individual is generally required, the basic test ofcorporate liability is the reasonableness of the corporation'spractices and procedures to avert illegal conduct.The Canadian Law Reform Commission has pointed out that onepurpose of corporate liability is to permit the law to make ajudgement about a process. 413 Of the two systems studied in thisthesis, the Finnish approach of structural fault appears to bebetter equipped to make such a judgement because it focuses onthe structural, collective blameworthiness of the entity, ratherthan on the fault of its individual members.Shifting the limelight from an individual to an entityprovides several advantages; for one thing, a system built onstructural fault is more equitable on its treatment of differentcorporations because it takes into consideration the specialcharacteristics of each corporation. Under the identificationdoctrine, if a directing mind is found guilty of a mens reaoffence, the corporation is automatically imputed regardless ofits efforts to prevent such offences. The problem became413. Responsibility for Group Action, supra 98 at 30.186accentuated in the Canadian Dredge & Dock when Justice Esteystated that a corporation is liable for the conduct of itsdirecting minds even when they are acting contrary to an expresscorporate policy. 414 At the same time, if no directing mind canbe identified, the corporation will escape from liability evenwhen it is obvious that a crime has been committed because offaulty corporate policies. Only strict liability offences withtheir due diligence defence offer any attention at all tocorporate efforts to discourage illegal behaviour. However, sincedue diligence relates to the efforts of directing minds ratherthan to the standard of care endeavored by the corporation as awhole, it is possible for a corporation to be convicted in spiteof its sincere efforts to comply.The inability of the identification doctrine to distinguishbetween "good and bad" corporations is against the fundamentalcriminal law principle of equal treatment, and one can readilyagree with Gerhard Mueller that "[l]t is a poor legal systemindeed which is unable to differentiate between the law breakerand the innocent victim of circumstances so that it must punishboth alike." 415 The fact that diverse corporations are equallyexposed to liability means also that they have "no way ofpredicting whether an individual prosecutor will seek criminalcharges against it on any given day for any given crime". 416Hence, since a corporation has no guarantees that its efforts to414. Supra 36.415. Mens Rea and the Corporation. (1957) 19 University ofPittsburg Law Review 21 at 45.416. Bucy, supra 378 at 1104-1105.187prevent illegal behaviour will be rewarded, it has no incentivesto make such efforts. Alteratively, a corporation can useexcessive caution to ensure that they do not run afoul of theuncertain standards. This can lead to overdeterrence of desirableconduct, and decline in creativity and efficiency. 417A further reason to focus on the entity instead of anindividual agent is founded on the fact that permanent increasein the level of compliance requires changes in the corporateculture. The pursuit of an individual agent ignores the fact thatthe roots of a problem are often in the entity itself. If thegeneral corporate culture continues to encourage non-compliance,a change of faces will do little good with regard to corporatecompliance. By steering the prosecution's focus from anindividual to the corporation, the prosecution may have moresuccess in underlining the need for change in corporate cultures,not in corporate agents.Founding corporate criminal liability on faulty corporatepolicies rather than on the conduct of individual agents is alsomore successful in realizing the basic criminal law principlethat "a man is criminally liable for his own acts and for themalone". 418 The identification doctrine does not change the factthat corporate agents are not always the corporation. While inmost cases the conduct of a directing mind probably does flowfrom group norms and can be identified with the corporation, theaccuracy of such a generalization is somewhat haphazard. 419417. See, Developments in the Law, supra 10 at 1271-72.418. Winn, supra 33.419. Hanna, supra 36 at 467.188Corporate policies can be the result of a series of decisionsmade by various individuals over a long period of time. In suchcases, identifying an individual or a group of individuals withthe corporation is not feasible, and the identification doctrineturns into little more than fiction.Hanna has noted that the requirement of a human co-perpetrator "restricts the reach of the criminal law from findingculpability in a group itself, which might be desirable" .420 Thediscussion above denotes this desirability and supports a systemin which corporate liability is founded on the standard ofcorporate efforts to enhance compliance with legislation. Hence,a corporation could be made liable only on the absence of areasonable effort to implement and enforce laws and regulationsinternally. The lack of reasonable effort would disclose theblameworthiness of corporate activities and form the foundationfor corporate liability.5.1.2. The Question of Guilty MindFounding corporate liability on the blameworthiness ofcorporate operations gives us a justification for imposingliability on the corporation for the acts and omissions committedby its individual members. A crime, however, consists of morethan mere acts and omissions. All offences, with the exception ofthose of absolute liability, require a guilty mind from theoffender in the form of intent, recklessness, or negligence.420. Ibid. at 467.189Hence, establishing the guilty mind must be the next step inconstructing the framework for corporate criminal liability.The crucial question is whose guilty mind must beestablished. Basically, we have two alternatives; we eitherrequire guilty mind from an individual agent, or we expand theabove discussed requirement of corporate fault so that corporateblameworthiness would not only provide a justification forimposing liability on a corporate entity, but it would also forman essential element of an offence. In the following, I shalllook at the practical implications of the two alternatives. Guilty individual In principle, individual guilt is an element of corporateliability in both the Canadian and Finnish systems of corporatecriminal liability. In the Canadian* system, the guilt entertainedby an individual is imputed to the corporation because theindividual members of the corporation are regarded as thecorporation. In the Finnish system, although corporate liabilityis founded on the blameworthiness of corporate policies andprocesses, the offence itself must be committed by an individualwith required culpability.Possibly the greatest problem invoked by the requirement ofan individual co-perpetrator is that in practice, detecting theindividual agent with the required guilty mind is oftenimpossible. Complex corporate power structures can make it verydifficult to establish guilt in one particular person. Actus reusand mens rea can also be divided between different individuals.190The Canadian mens rea offences with their strict requirement ofhuman co-perpetrator provide a good example of the problemsinvolved. If the court cannot identify a guilty individual, thereis nothing to impute and the corporation will escape fromliability. As we have seen above, it is then in the corporation'sbest interest to build the power structures so complicated thatfinding the responsible individual becomes difficult if notimpossible. Using the corporate veil to hide the individuals ismuch easier for a large corporation with multilevel or evenmultinational operations, thereby setting small and largecompanies on unequal footings.In Canadian strict liability offences the absence of themental element eliminates the problems involved withidentification; since the guilty mind is not an element of anoffence, there is no need to find a guilty agent. In fact, thereis no need to find an agent at all; it appears that as long as itis evident that someone within the corporation must havecommitted the act, the corporation can be made liable. Hence,there is no need to impose either mens rea or actus reus on aparticular person. Also, with regard to due diligence of thedirecting minds, the prosecutor does not need to specify whichcorporate officers were involved because the onus is on thecorporate offender to introduce evidence as to which directingmind had the responsibility over the subject matter of theoffence.The Finnish legislator has gotten around the problem ofidentification by creating the concept of anonymous guilt which191enables the court to convict the corporation even when noindividual has been prosecuted or convicted. It must, however, beevident that someone within the corporation has committed thecrime. An example of such a situation is a toxic spill caused bythe only near-by factory using the particular toxic in itsproduction processes.Although the principle of anonymous guilt offers some sortof a solution to the question of identification, it has its ownproblems. For one thing, anonymous guilt can discourageprosecutors from seeking conviction against both the corporationand the individual by providing an easily available finding ofcorporate liability. Prosecuting both the corporation and theguilty individual might be desirable for optimal compliance. Therole of individual liability will be discussed in more detaillater in this chapter.The second and more fundamental problem with anonymous guiltis its apparent inconsistency with the requirement of fault.Anonymous guilt is unestablished guilt at best, and as such, itconflicts with the contemporary criminal law doctrine thatrequires the establishment of both actus reus and mens rea. Therequirement serves the functions of predictability and socialstability by providing people with security about the standardsused in the criminal process. Without such security, people'sfaith in the system, and thereby their will to comply withlegislation will diminish. Hence, in spite of its apparenteattractiveness, a degree of restraint must be employed whenconsidering the possibility of bestowing anonymous guilt.1925.1.2.2. Guilty corporate policyAn alternative way to establish guilt in corporate offencesis suggested by Pamela Bucy in her article "Corporate Ethos: AStandard for Imposing Corporate Criminal Liability". 421 Bucysuggests that instead of pursuing guilty individuals, guiltshould be established on corporate structures and policies.Bucy's approach to corporate criminal liability starts froman assumption that each corporation has a distinct andidentifiable personality, or "ethos", separate from itsindividual members. 422 In a sense, the Finnish system ofcorporate liability is also built on the notion of a separatecorporate identity. Bucy, however, takes the notion a stepfurther by requiring that the offence element of guilty mindmust be found from this identity.According to Bucy, "the standard proposed herein imposescriminal liability on a corporation only if the corporationencouraged the criminal conduct at issue. "423 By encouragementshe means primarily intentional crimes. The idea can, however, beextended to all levels of mens rea so that corporate behaviourcould be negligent as well as intentional. The notion of"corporate intent" or "corporate negligence" would nicely solvethe problems caused by the requirement of individual co-perpetrator. Since the guilty mind of an individual actor wouldbe irrelevant to corporate liability, a corporation could not421. Supra 378.422. Ibid. at 1099.423. Ibid.193evade liability by hiding its directing minds, and the equivocaltheory of anonymous guilt would become unnecessary.Basing corporate liability on genuine corporate guilt mayalso increase the uniformity of enforcement. In the presentCanadian practice, liability can raise from almost any act oromission committed by an individual agent. Such broad potentialliability offers little guidance to prosecutors. Lynne Huestishas noted that at present, the enforcement decision is often"creative ad hockery" in which political and socioeconomicfactors play a significant role. 424 The uncertainty andunpredictability created by such wide discretion could beeliminated or at least limited if the prosecutors were forced toselect cases based on the blameworthiness entertained incorporate policies and practices. 425Finding the guilt in corporate policies rather than in theminds and wills of individual corporate agents is also betterequipped to reflect the realities of today's society by shiftingthe focus from the "evil mind" of the offender to the social harmcaused by irresponsible behaviour. Ezzat Fattah has criticizedthe present sin and moral orientated concepts of "criminalintent" and "moral responsibility" for making "it impossible toeffectively control, sanction, and curb a wide variety ofsocially harmful and dangerous behaviours" such as thecriminality of negligence, corporate crime, and environmental424. Supra 390.425. See Bucy, supra 378 at 1108-09.194offences. 426 He notes that the inadequacy of these post-French-revolution era metaphysical and philosophical concepts has beensuch that legal scholars have been forced to "do some mentalacrobatics in order to come up with acceptable deviations,exceptions, and exemptions from [such] metaphysical yetfundamental principles [as] `wens rea'" . 427 These "deviations"include such concepts as strict liability and corporate liabilitywhich are both attempts to deal with modern problems throughdesperately outdated concepts. Obviously then, the evolution ofthe concept of guilty mind is required to better reflect socialrealities such as the rising predominance of corporate actors. 428The change from individual guilt to corporate fault requiresa wholly new approach to the issue of establishing guilt. Thedecisive factor must be the fault entertained in corporateactivities as a whole. Bucy suggests that prosecutors should lookat such factors as the corporate structure or hierarchy,corporate goals, education and monitoring of employees, andcompensation incentives. 429 Leaving certain areas of corporateresponsibility unattended or insulating corporate executives fromliability are examples of structural deficiencies that wouldconstitute corporate guilt. Illegal behaviour can also beenhanced through unrealistically high corporate goals. It was426. Beyond Methaphysics: The Need for a New Paradigm. A Paperpresented at the International Research Colloquium of theCentennary of the Finnish Penal Code - 100 Years of the FinnishPenal Code, September 1990, University of Helsinki, Finland, at8.427. Ibid. at 8.428. See Bucy, supra 378 at 1106-07.429. Ibid. at 1129-46.195pointed out in the commentary of the American Model Penal Codethat "the economic pressures within the corporate body [may be]sufficiently potent to tempt individuals to hazard personalliability for the sake of company gain."430Bucy gives some examples of the types of inquiries relevantin assessing whether corporate employees have been properlyeducated and supervised. For example, are employees informed in acomprehensive manner of regulatory changes that affect theirduties? Does middle management have special training in ethicsand government regulation? Are internal audits and inspectionsconducted? 431 It must also be asked if the illegal conduct hasbeen clearly and convincingly forbidden. Merely issuing adirective prohibiting all illegal activity is not enough if thereis insufficient proof of sincere attempts to implement andenforce laws and regulations. Employee compliance can also beencouraged with incentives such as bonuses, stock options, orother benefits. Bucy notes that "[t]he values reflected incompensation will permeate an entire corporation and communicatedto employees what behaviour on their part the corporation favorsor dislikes. "432Since the acts of corporate executives are likely torepresent the practices and procedures of the corporation, theinvolvement of top officials in corporate criminal activityshould be regarded as a strong indicator of corporate guilt.430. Model Penal Code, paragraph 2.07 commentary at 158-59 (tent.draft no. 4, 1956) 174, quoted in ibid. at 1133.431. Ibid. at 1134-37.432. Ibid. at 1139.196Hanna has suggested that if the prosecutor is able to point to aguilty directing mind, "it could raise an evidentiary presumptionthat the acts of the directing mind are instances of corporatepolicy." 433Bucy suggests that the onus of proof about corporate guiltshould be on the prosecutor. While the prosecutor might succeedin showing negligence "beyond reasonable doubt", it is doubtfulthat such a high standard could be met with intentional offences.A possible solution could be to lower the standard of proof from"beyond reasonable doubt" to the balance of probabilities. Thealleviated standard would, in addition to making the prosecutor'sjob easier, also encourage corporations to pay more attention totheir internal control mechanisms and thereby increasecompliance.The traditional high standard of proof required in criminalcases is justified by the purposes for which the penal sanctionscan be used; interfering with a person's liberty, and theeconomic and social consequences that criminal conviction entailsmake it important to have strict safeguards against the possibleabuse of law. However, it can be argued that since a corporationis not a human being, the need for legal safeguards is limited.For one thing, penalizing a corporation does not affectindividual rights such as liberty or economic security - at leastnot directly. Secondly, corporations are generally much morepowerful and have more resources to defend themselves thanindividual defendants. Also, corporate structure enables433. Supra 36 at 471.197corporations to hide behind the maze of complex power structures,different levels of authority, and internal regulations.Corporations are ideal for creating opportunities for unlawfulconduct; geographical expansion, size, structure and internalprocesses can provide an excellent shield against prosecution.Another way to establish corporate mens rea has beensuggested by Brent Fisse. Under his "reactive corporate fault"proposal, a failure by the corporation to change its behaviourafter a conviction or other coercive measure would itself besufficient to establish mens rea. 434 The proposal is justified inlight of the present sentencing practice which generally regardsrecidivism as an aggravating factor because it shows "heedlessdisregard" to the laws and orders of authorities.Obviously, a corporation cannot be made liable for allcrimes committed within its walls. The act must reflect corporatedecisions, and not simply the choices of individuals within thecorporation; no social purpose is served by penalizing acorporation for an offence that is totally disconnected to itspolicies and operations, or which victimizes the corporationitself. Therefore, corporate liability must be limited tosituations where there is some sort of contractual relationshipbetween the corporation and the individual. Such a relationshipexists between the corporation and its management, employees,agents, or anyone else who has made a contract to work or act forthe corporation. Hence, "hiring" someone outside the corporation434. Reconstructing Corporate Criminal Law. (1983) 56 SouthernCalifornia Law Review 1141 at 1189.198to commit a crime for the corporation establishes the requiredrelationship. When determining whether the required relationshipexists, the basic requirement is the corporation's competence topractise authority over the individual.The second limitation must be based on the intended benefit.Penalizing the corporation for something it was not intended tobenefit from would be grossly unfair. The most aggravated exampleis an offence in which the corporation itself is a victim. Thelimitation should, however, be restrained to the beneficialintention; whether corporation de facto benefited from an offenceshould not affect corporate liability.5.1.3. The Role of Individual LiabilityOnce the element of guilt is founded on the guilty corporatepolicy, there is no longer a need to find a guilty individualagent within the corporation. This does not mean, however, thatthe crime committed by an individual has lost its significance.Where an individual within the corporation demonstrates intent tocommit a crime, she too is subject to blame, and must be heldresponsible.Prosecuting both the corporation and the individual isdesirable for several reasons. For one thing, individualliability strengthens employee's incentives to resist corporatepressures to violate the law in the pursuit of profits, therebyincreasing compliance. Individual liability also emphasizes themanagement's role in forming environmentally responsiblecorporate culture; management must comprehend that they not only199have the duty to make profit, but to make profit in a way thatgives priority to the establishment and proper operation ofenvironmental protection systems.Sweigen and Bunt justify personal liability by noting that"[o]ccasionally...there is a bad apple in senior management orownership." 435 If left unpunished, such "bad apples" can movefrom corporation to corporation, and bring their degeneratingpolicies and practices into several corporations. Thus,prosecuting the "bad apples" is an effective way to preventunwanted corporate behaviour.5.1.4. Entities LiableThe question of individual liability brings up aninteresting question with regard to small closely held companies.If the owner of a small one-person company is convicted, whatpurpose does it serve to prosecute the company as well? Bucy hasnoted that"[u]nlike the large corporate entity that could continue toencourage new generations of executives to commit criminal acts,the closely held corporation generally has no identity apart fromthe convicted individual. Hence, following conviction of thisindividual, the government gains no further deterrence byconvicting the corporation." 436Another point worth mentioning is that penalizing both thecorporation and its owner may in fact mean penalizing the sameperson twice. Such double convictions can lead to excessivepenalties and unreasonable hardship to the offender. Obviouslythen, the prosecutor must practice some discretion when laying435. Sentencing in Environmental Cases, supra 127 at 41.436. Supra 378 at 1151.200charges against small companies. Similarly, the sentencing judgehas to take the cumulation of sanctions into account whendetermining the penalty for a closely held corporation.When deciding about the application of corporate liability,the objective must be equal treatment of those effected. Thisrequires that certain entities are not excluded from liabilitysolely because of the form they operate in. The concept of acorporation must be wide enough to include any entity that hasbeen formed for the purpose of operating in a collective form asopposed to a unit that is distinctly an individual operation.This wide definition has been met in the Finnish proposal whichincludes partnerships, associations, foundations, as well aslarge private entrepreneurs. Since the definition covers bothprivate and public entities, public corporations do not receivespecial treatment but are on equal footing with other entities.A corporation may attempt to avoid liability by changing itsname, declaring bankruptcy, or by dissolving or amalgamating toanother company. The change of name or form should not effectliability but prosecution must be possible against the new oramalgamated company for the offences committed by the oldcompany. Individual liability secures the possibility to bringprosecution against individual agents when the corporation isdissolved or in bankruptcy.2015.2. SentencingSentencing has been called the climax of the criminalprocess. 437 It is the most visible result of prosecution throughwhich the general public, rightly or wrongly, tends to judge thesuccess of criminal process. Consequently, sentencing has animportant role in building respect for the legal system ingeneral and the particular law specifically. Quoting Sweigen andBunt: "justice...cannot be said, or be seen, to have been doneuntil the offender has received an appropriate and effectivesentence". 438 The purpose of this part is to pursue such asentence for a corporation that has been convicted for anenvironmental offence. The question of sentencing objectives isdiscussed in the first section of the presentation while the twolast sections are devoted to determining the quality and thequantity of a sanction.The wide range of sentencing principles, options, andfactors employed in Canada and Finland was extensively covered inthe previous chapters. Of all these various alternatives I haveattempted to choose and further develop the ones that appear tobe best suited to encourage corporate compliance withenvironmental legislation.437. Government of Canada, Sentencing. (Ottawa: Government ofCanada, 1984), at 1.438. Sentencing in Environmental Cases, supra 127 at 2.2025.2.1. About the ObjectivesThe Canadian sentencing practice shows widespread confidencein the utility of deterrence in combating corporate non-compliance with environmental legislation. The strong reliance ondeterrence is based on the notion that environmental offences aresomehow "morally neutral", mala prohibita instead of mala in se,and since there is no morally wrongful conduct to condemn, theuse of criminal sanctions can only be justified by theutilitarian goal of preventing harmful conduct.The logic of this path of reasoning is questionable.Sweigen has pointed out that if the penal sanctions weremeant "only to deter, and not to punish, this goal couldprobably be achieved in many cases just as easily throughadministrative procedures without the stigma attached toprosecution". 439Obviously then, the legislator must have had some special reasonfor resorting to penal sanctions. This reason can be found fromthe condemnatory features of a penal sanction; the forbiddenconduct deserves a criminal sanction because it is morallyblameworthy. According to von Hirsch,"[p]revention explains why the state should impose materialdeprivations on offenders. Reprobation for wrongdoing justifieswhy their deprivations should be visited in the condemnatoryfashion that characterizes punishment.. 440Obviously then, the legislator has desired to call attention tothe wrongfulness of certain types of unwanted environmental439. Sweigen, supra 363 at 94.440. Past of Future Crimes: Deservedness and Dangerousness in theSentencing Criminals. (New Brunswick: Rutgers University Press,1985), at 170.203behaviour. The very fact that a penal sanction has been attachedto the conduct rather than a civil or administrative measure isan indication that there is a degree of opprobrium attached tothe type of behaviour in general and in the particular case.Since the legislator has viewed certain environmental valuesas deserving the protection of criminal law, sentencing mustnaturally support this choice. It is evident, then, thatdeterrence alone cannot provide a satisfactory basis forsentencing in environmental cases, but the synthesis ofutilitarian and retributive sentencing objectives is needed. Thevalue free fashion in which deterrence pursues its goal of crimeprevention confuses the public about the seriousness ofenvironmental crime. If the public does not perceive the sanctionas clearly condemning the forbidden conduct, it becomes uncertainabout the importance of the values sought to be protected, andits inhibitions against non-compliance are weakened. By clearlydenouncing the irresponsible conduct of a corporation, thepenalty demonstrates the value of environmental protection andshapes the legal and moral attitudes of citizens. These attitudesare then transferred to the corporate decision-making processthrough individual directors, managers, investors, employees, andconsumers.The synthesis of both utilitarian and retributive aspects isapparent in the Finnish sentencing theory; while the primaryjustification for penal sanctions is utilitarian crimeprevention, a penalty is regarded as a demonstration of society'sreproach through which citizens' sense of morals and justice is204reinforced and their inhibitions against committing crimes arestrengthened. The theory works on two levels; in addition toencouraging compliance through the threat of penalties, thesentencing system is also aimed at building inner commitments tocomply. The proportion in which these different objectives are tobe applied must be determined on the basis of the facts of eachindividual case. In offences of great opprobrium the accent mustbe on the denouncing components of the sentence, while deterrenceand other utilitarian objectives should dominate sentencing forless reproachable offences.Both utilitarian and retributive sentencing rationales aboveall serve the interests of the state. Even when a successfulprosecution results in a penalty, it can be asked what does thepenalty contribute to the victim or towards achieving a higherlevel of environmental quality. Traditional penal sanctions havefocused on the offender, not on the offended, and whilesatisfying the state, they have done little to remedy the harmcaused by the crime.Although the very purpose of criminal law is to protectfundamental values, such as property, health, and now,environmental quality, the protection seems to extend only tosentencing where it abruptly stops. Remedial issues aretransferred from criminal to civil and administrative procedures,thereby denoting the secondary status of these matters. Suchsecondary status does not enhance the public's confidence in thecapacity of the state to protect their interests. Also, bybranding the redressing of the harm as subordinate to punishment,205the system loses a sublime opportunity to call attention to thesubstance of injured values. The criminal sentencing processserves as a powerful tool in making clear what values are atstake in the conflict of the offence, and affirming those valuesthat have the support of the community. The Canadian Law ReformCommission has pointed out that the "[r)ecognition of thevictim's need underlines...the larger social interest inherent inthe individual victim's loss. Thus, social values are reaffirmedthrough restitution to the victim. "441 Civil and administrativeprocesses do not carry the stigma of criminal measures, andconsequently, their value affirming impact is less compelling.Including redress into the criminal sentencing process maybe desirable also for the sake of procedural efficiency; insteadof wasteful duplicate or triplicate procedures, all mattersarising out of the same activity could be dealt with in oneprocedure. A single procedure might also provide increasedprotection for the victim who may perceive his chances ofattaining any compensation from a big corporation so small thathe becomes discouraged and refuses to make claims against thecorporate offender.While it is obvious that the spotlight of sentencing muststay on the offence and the offender, and that redress cannotstand alone as a sentencing objective, the discussion abovesupports placing more attention to remedial matters insentencing. Therefore, the following sentencing options include,in addition to traditional "punishments", measures that are aimed441. Restitution and Compensation and Fines, supra 169 at 6-7.206at compensation and reconciliation. It must be noted that therange of possible options is much wider than what is possible tomake in this presentation.5.2.2. The Quality of a Sanction: Sentencing Options5.2.2.1. The Fine The sentencing principle most commonly linked to the fine isdeterrence. The deterrent effect of the fine is based on theassumption that most corporations are profit oriented and thatthey are rational, that is, they select the most appropriatemeans to attain their economic goals. Consequently, the risk ofthe fine is supposed to stop a rational decision-making fromcommitting an offence and encourage her to increased apprehensionand care.In order to have deterrent effect, the fine must besubstantial enough to persuade the corporation that illegalconduct is "not worth it". The discussion in previous chaptershas revealed the inadequacies of the fine with regard to extremewealth or inability to pay; what is a mere slap on the wrist to abig and wealthy corporation may be disastrous to a small company.A connected problem with high fines is what Coffee refers to asthe "deterrence trap". 442 He notes that in order to be deterrent"the expected punishment cost" must exceed the expected gain. Therisk of apprehension and conviction must also be taken intoaccount. According to his calculations, if the expected gain isone million dollars and the probability of apprehension is 25%,442. "No Soul to Damn: No Body to Kick", supra 27 at 389-93.207the penalty would have to be four million dollars if the expectedpenalty is to equal the expected gain. Hence, the fines neededmay far exceed the corporation's ability to pay, and "our abilityto deter the corporation may be confounded by our inability toset an adequate punishment cost which does not exceed thecorporation's resources. 1,443The fine is also a somewhat weak measure to encourage changein unwanted corporate policies. For one thing, the corporationmay decide to treat the fine as a mere business cost and pass thefine on to its shareholders, customers, or employees. Even if weaccept the argument that "spilling over" is an inevitable resultof the imposition of any penal (or for that matter, civil oradministrative) sanction, and that it may well be an unavoidableeffect of a choice that achieves maximum good, it does not changethe fact that such passing on can drastically dilute the intendedimpact of the fine. Secondly, although in theory the corporationis expected to revise its environmental policies and practices,the fine in no way compels the corporation to respond in thisway. A 1978 empirical study about the impact of the fine underthe Australian Trade Practices Act showed that in 40% of thecases, the imposition of the fine did not incite anyorganizational reform. Thus, the ability of the fine toeffectively motivate companies to adopt preventive controls isquite equivocal. 444443. Ibid. at 390.444. Brent Fisse, Sentencing Options against Corporations. (1990)1 Criminal Law Forum 211 at 225 -26.208As noted above, deterrence is not sufficient to form acomprehensive basis for corporate sentencing. A sanction shouldalso emphasize the social undesirability of the illegal conduct.Although all criminal sanctions carry certain denouncing stigma,the fine is possibly the least successful in conveying themessage that the offence is intolerable. It has been argued thatthe exclusive use of fines is like putting a price tag on anoffence, thereby trivializing the seriousness of the crime.Corporations might get the impression that non-compliance ispermissible as long as the corporation pays the going price. 445A further limitation of the fine is that it does notcontribute to environmental clean-ups or victimcompensation. The fact that the fine goes to governmentrevenues does not guarantee reparations or restitution;there are several hands in the public purse, andunfortunately the environment is often one of the last onesto receive anything. Fines can also be counterproductive inthat they can take away from small corporations resourcesthat might otherwise be spent on pollution control. 446Nevertheless, although the discussion here is by nomeans a comprehensive presentation about all theshortcomings of the fine, the limitations of the fine shouldnot be overstated. The fine provides a good basic sanctionwhich the courts and the public are accustomed to. The fineis also easy to administer, and it is the most economical445. Ibid. at 220. See also Hanna, supra 36 at 475.446. See Sweigen, supra 363 at 98.sanction available since it generates revenue for the publicpurse. Nevertheless, its exclusive use is apt to lead toinefficient sanctions with little or no effect on corporatebehaviour, not to mention its inability to redress the harmcaused by the offence. Therefore, alternative andsupplementary sanctions must be fashioned to meet thedemands of an efficiently working sentencing system. Alsothe fine itself can be developed to better suit corporateoffenders. In the following, I shall present some ideas forthe development of the fine and other sentencingalternatives. The equity fine Coffee has suggested that instead of a cash fine, an"equity fine" could be imposed on a corporation. 447 Underthis model, a convicted corporation for which a heavypenalty was in order would be required to authorize andissue shares to a crime victim compensation fund or to asimilar type of fund of a market value equal to that ofcash. The fund could then liquidate the securities at will,thereby avoiding many of the financial problems involvedwith a direct cash. Coffee suggests that the equity finecould be increased with each succeeding criminal conviction.Recidivism would then eventually lead to a situation inwhich the fund would hold a sufficient number of shares toappoint "public interest" directors. Consequently, since the447. "No Soul to Damn: No Body to Kick", supra 27 at 413-20.209210economic performance of the company would be directly linkedto its environmental policies, shareholders would be forcedto consider the ethical aspects of their investment.One advantage of an equity fine over a cash fine is itsability to avoid the "deterrence trap" discussed above.While the cash fine is limited to the sum of thecorporation's available liquid assets, the equity fine wouldraise the upper limit of the amount collectible, therebyallowing the fine to reach the necessary deterrence level.Furthermore, the equity fine provides a possibility to seizea share of its future earnings. The possibility would be ofgreat significance with young companies with high growthprospects but low present book value. Such a company is"essentially immune from high cash fines because it has onlymodest liquid assets, and in part for this reason it may betempted to risk illegal activities".The equity fine would also reduce the spill over toemployees and consumers and focus instead on theshareholders. Yet, Fisse has pointed out that the equityfine is unable to differentiate between authoritativeshareholders and those who are "merely relatively powerlessoutsiders". 4485.2.2.3. The day-fine systemAn alternative way to evolve the fine would be to adopt theday-fine system in corporate sentencing. The system is used with448. Fisse, supra 444 at 256.211individual offenders in Finland. In this system, the size of afine is determined by the financial situation of the offender.According to the basic rule, one day-fine is one third of theoffender's total daily income. The number of day-fines, in turn,is determined on the basis of the seriousness of the offence.A system based on day-fines would increase both the equityand clarity of the sentencing system; the day-fine takes intoconsideration both the offender's ability to pay and theseriousness of the offence. The number of fines imposed directlyshows the severity of the sanction. This means enhanced clarity.It is easy enough to see that an offence worth 10 day-fines isless serious than an offence worth 100 day-fines. This alsoprovides increased guidance for the courts in sentencing.It is quite surprising that the Finnish Penal Code TaskForce did not wish to employ the day-fine system with corporateoffenders. The Task Force rejected the idea by referring to theimpossibility of transferring unpaid day-fines into imprisonment,and noted somewhat ambiguously that the "nature" of the day-finesystem does not suit corporate offences without furtherjustifying itself. 449Although both the equity fine and the day-fine systemwould contribute to the improvement of the fine, it is clearthat standing alone they are not"adequate tools to deal with problems of... recalcitrance, oroffences of great opprobrium...(n]or are fines applied where theyare most needed: in environmental clean-up or restoration, tocompensate victims, or to reduce the cost of effective449. OikeushenkilOn rangaistusvastuu, publication 13/1987, supra24 at 93-94.212enforcement. Other techniques should be made more readilyavailable for courts." 450Some suggestions for these other techniques will bepresented next. Adverse publicityAs noted above, the ability of the fine to denounce unwantedbehaviour is quite limited. Of all the sanctions employed inCanada and Finland, probably the strongest denouncing stigma isattached to court-ordered publicity.Although rare today, publicity sanctions were common to theEnglish criminal law of earlier centuries. For instance, thenames of merchants who sold adulterated products were publiclyposted. 451 In Finland, the most common form of publicity waspillory, which was normally located in front of the church, sothat "the decent folks" could show their disapproval and take awarning example from the wrongdoers.Publicity is a kind of a modern pillory. It carries a strongdenouncing stigma and can seriously damage the public image andprestige of a company. In R. v. Giant Yellowknife Mines Ltd.Magistrate Smith noted thatI am driven to the conclusion that the defendant is notparticularly concerned with the size of the penalty...but muchmore with its corporate image which, if it was seriously damaged,renders it difficult to operate in a climate of hostile publicopinion. 452In addition to being an important element of a successful,profitable business, a good public image can also carry great450. Sentencing in Environmental Cases, supra 127 at 56.451. Fisse, supra 256.452. Supra 240.213value to the corporate directors and officials. Several studieshave shown that white-collar, middle-class managers payparticular attention to their immaculate reputation. 453 Hence,management has a vested interest in keeping the company out ofnegative limelight because if the reputation of the company theywork for becomes blemished, some of the lost prestige is likelyto cast over directors and senior officials.In order to be effective, a publicity sanction must be ableto attract public attention. An offence that can cause harm tohuman life or health, or to private property is most likely todraw the necessary attention. 454 Environmental offences fitperfectly in this category. Fear of cumulative toxic, diseases,dying forests or dirty beaches is something the majority ofpeople share. Crimes involving these fears are likely to raisegreat public concern. With increased public awareness about theharms caused to the environment by pollution, fear of publicitycan be a major factor when a corporation makes decisions aboutits pollution policies.Publicity is not, however, without problems; according toFisse, the effectiveness of publicity can suffer from persuasion,counter publicity, dissolution, change of a location, or a changeof the corporate name. 455 The impact of publicity is thereforequite uncertain. Also, publicity requires some453. See, Coffee, Making the Punishment Fit the Corporation,supra 261 at 21-28; Nagin - Blumstein, The Deterrent Effect ofLegal Sanctions of Draft Evasion. (1977) 29 Stanford Law Review241.454. Coffee, ibid. at 22-23.455. Fisse, supra 256 at 109.214oversimplification. In order to get through, "the message must besimple and catchy". 456 This can cause a certain degree ofinaccuracy. Coffee was also concerned about the "spilling-over"problem, harm done to innocent parties. 457 However, the"spilling-over" caused by publicity can be eliminated better thanthat caused by fines. While a fine hits directly without giving asecond chance, publicity can be built in such a manner that itgives the offender a chance for "rehabilitation". Some sort of aprobational publicity order would give the offender anopportunity to show improvement and fulfill his obligationsbefore becoming exposed to publicity.Public attention can also become weakened if all channelsare overloaded with negative news about environmental offenders.The sanction loses its special force if the public constantlyreceives an implicit message that all corporations are bad andpollute. 458 To avoid public boredom the sanction of publicitymust be employed sparingly. It should be reserved for the mostflagrant offences when a fine alone cannot strongly enoughdenounce the conduct or cannot be used due to the weak financialstanding of the offender. A small fine combined with bigpublicity could be a very effective composite if used withrestraint.456. Coffee, Making the Punishment Fit the Corporation, supra 261at 23.457. Ibid. at 24.458. Ibid. at 22.2155.2.2.5. ForfeitureIn the case of a theft, the stolen property is given back toits rightful owner and the punishment imposed goes beyonddepriving him of his illegal profits. Similarly, in tax cases, afine is levied in addition to the assessment of the tax evaded.In environmental cases, prospective savings or gains are thegreatest incentive for committing a crime. If this incentive wasremoved, the temptations for violations would be greatly reduced.Forfeiture of profits also serves an important normativefunction; by removing the illegal enrichment, it secures a justequilibrium on behalf of those who were willing to be lawabiding.In the Canadian sentencing practice, forfeiture of profitshas been included in the fine. However, when profits are includedin the fine, the two different components of the sanction -punishment and removal of unjust enrichment - become confused.There is no way of telling just how much of a fifty thousanddollar fine is profit, and how much is punishment. Determiningthe penal value of the offence becomes difficult, and this kindof a mixture provides no guidance for sentencing practice causingambivalence and inequality in sentencing. For these reasons, theCanadian Law Reform Commission recommended differentiatingbetween the profits of a crime and the fine. The Commission notedthat in traditional crimes, such as theft, the offender isrequired to submit the stolen property and the fine imposed goesbeyond our desire to deprive him of his illegal profits216reflecting only the view we take of the particular crime he hascommitted. 459This approach has been adopted in Finland where illegalprofits are removed from the offender by forfeiture. In theFinnish system, first the profit is forfeited, and then theactual sentence is calculated separate from forfeiture. Thegreatest difficulties with forfeiting the profits lie in showingcausality between pollution and profit, and assessing the amountof savings or gain with any degree of accuracy. The FinnishEnvironmental Offences Committee recommended drafting guidelinesfor this purpose. Another solution suggested by Justice Stuart inUnited Keno Hill Mines is to place the onus about the amount ofsavings or gain on the corporation since it is privy to thenecessary information. If the corporation does not provide theinformation or if the provided information appears unreliable, areasonable prosecutor's estimate would suffice. An alternativeway to gather evidence would be to let courts hear complyingcompetitors on the extent of economic benefits the offenderderived from non-compliance. 460In addition to removing the profit, forfeiture can be usedto deprive the corporation of its means to commit furtheroffences, such as the property that was used in committing theoffence or the corporation's licences and permits to operate. Inspite of their obvious effectiveness, such measures are a rarityboth in Canada and Finland.459. Criminal Responsibility for Group Action, supra 98 at 39.460. Supra 94 at 51.217Revocation of licenses could also serve another function.One big problem with the fine is caused by the offender'sinability to pay. Unlike an individual offender, in the case of adefault, a corporation cannot be imprisoned. The OntarioProvincial Offences Act has come up to with the solution byenabling the courts to suspend or prohibit the issuance of thecorporation's licences, permits and approvals to operate untilthe fines are paid. 461While the forfeiture of profits would appear to be expedientin most environmental offences, forfeiting the offender'sproperty or revocating his licences should be reserved to onlymost extreme cases. In practice, forfeiture of property can meanthe closure of a factory and loss of livelihood or goods andservices for numbers of people. One possible way to limit thenegative impact of property forfeiture is to make the forfeituretemporary or a conditional measure. Redress A possible solution to the controversial question about thesuitability of compensatory and remedial measures to criminalsentencing is to make such measures probationary orders connectedto a corporate probation. The Canadian courts have taken sometentative steps towards putting corporations on probation. 462Even the little experience shows that probation can form aconvenient platform upon which different sanctions can be based.461. See, Ontario Environmental Protection Act, supra 22, s.146e(1).462. R. v. Panarctic Oils Ltd., supra 124.218By connecting the remedial measures to probation, the penaltywould retain its punitive nature while performing the function ofredress.Probationary orders could consist of at least four differenttypes of measures; making compensation or restitution directly toan individual victim, making reparation or cleaning up thedamaged site, community service, and orders to take specificaction to remedy the problem that has caused the violation. Thetwo last mentioned measures would be of particular importancewhen there is no identifiable victims or when the offence has notcaused any immediate harm.An order to clean up or perform services to the victim orthe community forces the offender to accept some responsibilitytowards the victim and society in general. Unlike the fine thatrequires only the payment of money, a community service orderrequires both time and effort from the corporation. By forcingthe corporation to face the consequences of its actions, suchmeasures may even carry some rehabilitative value. Communityservice and other remedial measures are also more condemnatorythan the fine because they in a very public manner demonstrate tothe public that the offender is being punished for his illegalbehaviour. 463When a corporation is ordered to take specific action torectify the problem that has caused the violation, thecorporation is essentially required to investigate the offence463. See Frank Merrit, Community Restitution - An AlternativeDisposition for Corporate Offenders. (1984) 20 Criminal LawBulletin 355. See also, Fisse, supra 444 at 224-49.219and take appropriate measures to prevent future violations. Themeasure was employed in R. v. Robinsons' Trucking Ltd. when thecompany was ordered to gear all of its tankers with equipmentdesigned to prevent future ecological mishaps, and to designatean on-scene commander to supervise future oil spills as well asto designate and train an environmental response team. 464 OtherCanadian applications include an order to put in place a wastemanagement strategy for upgrading the waste treatment andhandling systems of a company 465 , and an order to prepare amanual covering the common environmental problems of theparticular area of operation. 466An American study by Arthur Lurdigio and Robert Davis showedthat the offenders who received a notification letter remindingthem about the restitution amounts owed and threatening them withserious sanctions in case of a default, were significantly morelikely to accomplish restitution than those who did not receive a"reminder". 467 Such notification process may be a good way toencourage compliance with any probationary order.5.2.3. The Quantity of a Sanction: Sentencing CriteriaHaving determined the objectives pursued in corporateenvironmental sentencing and the tools these objectives can bepursued with, the question about the proper distribution of these464. R. v. Robinsons' Trucking Ltd., supra 190.465. R. v. Oxford Frozen Foods Ltd., supra 134.466. R. v. Placer Developments Ltd., supra 213.467. Arthur Lurigio - Robert Davis, Does a Threatening LetterIncrease Compliance With Restitution Orders?: A Field Experiment.(1990) 36 Crime and Delinquency 537.220tools remains to be solved. Thus, we must determine theappropriate limits for the application of the sentencing optionsand decide about the criteria for deciding "how much sanction".When looking for applicable sentencing criteria, the naturalstarting point is in sentencing objectives; the sentencingobjectives encompass the larger goals which are then supposed tobe transferred to the sentencing criteria. The sentencingobjectives discussed above reflect both the goal of preventingfurther harm caused by unwanted behaviour, and the objective ofbringing attention to the blameworthiness of the conduct.Obviously then, when deciding about the proper amount of asanction, both the harm and the fault entertained in an offencemust be taken into consideration. The more blakeworthy thebehaviour has been, the more attention must be called on itthrough strict, denouncing sanctions. Similarly, the graver theharm subsequent to the offence, more reason there is to employstiff penalties to prevent similar harms from taking place in thefuture.The aspects of harm and culpability are brought into asynthesis in the principle of proportionality. The principledeveloped in the early 1970s from the theory of just desertswhich emphasized both the condemnatory and fairness aspects ofpenal measures by advocating that the penalty should be no morethan the offender deserves. Accordingly, when determining thequantum of a penal sanction, "[s]everity of punishment should be221commensurate with the seriousness of the wrong." 468"Seriousness", again, depends both on the harm done (or risked)by the offence and on the degree of the offender's culpability.In addition to denoting just relation between the offence and thepenalty, the principle also requires that offences must be inproportion to each other so that similar offences are treated thesame. 469Employing the principle of proportionality as the primarycriteria for sentencing is justifiable on several grounds. Forone thing, the principle meets the every day concept of fairnessby advocating equity and proportionality. Since the peopleperceive that the penal sanctions are distributed on fair andjust basis, their respect towards the legal system and the valuesinherent in it increases. The principle also "ensures...that therights of the person punished not be unduly sacrificed for thegood of others". 470 If the only decisive criteria was to preventfurther harm, maximized deterrence could lead to unjustifiablysevere penalties. The requirement of fault, then, serves as animportant safeguard against harsh and unfair penalties. 471Principle of proportionality is also apt to increase thepredictability and uniformity in sentencing by providing thesentencing court with a guideline about the relevant sentencingcriteria. This may help the courts to differentiate betweenfactors of real significance and those of only marginal468. von Hirsch, Doing Justice, supra 132 at 66. See also,Schleger, supra 35 at 43-47.469. von Hirsch, ibid. at 69.470. Ibid. at 70.471. Ibid. at 69-70.222relevancy. This is not to say that the task of determining anappropriate and effective sentence would be made easy. The vastdiversity of environmental offences and offenders makes itdifficult to find factors of general acceptance that wouldautomatically be applicable to each particular case. In thefollowing, I shall look at the different elements of theproportionality principle in more detail, and discuss thedifferent factors that can be taken into consideration insentencing. In the first two sections, I shall look at theelements of harm and culpability, and the third section isdevoted to discussing equity. HarmThe concept of harm involves a variety of different aspects.When assessing the harm we must determine both the quality andquantity of the harm caused or risked. 472 Since the harm isessentially a loss of value, determining the quality of harmrequires grading the different values at stake. While the highvalue of human life and health is self-evident, ranking someother values with each other can be more difficult; what is thevalue of clean air and water compared to economic welfare of acommunity? Is a safe swimming beach more valuable than taxrevenues provided by the polluter? Similarly, with regard to thequantity or extent of the harm caused or risked, the court isfaced with the difficult question whether to look at the harm at472. See generally, Schleger, supra 35 at 91-115.223present or whether to take into consideration a probable orpossible harm to the future generations.The question of harm represents , a typical example of thecounteracting forces behind the decision-making in sentencing.Sweigen and Bunt talk about "ecological consciousness" as "anability to see past the obvious and immediate conflictinginterests". 473 When assessing the different interests at stake,the natural starting point would appear to be the particular lawor regulation that has been violated; the values sought to beprotected should carry the most value in the assessment. Hence,if the violated law is the Clean Water Act, the decisive factorshould be the state of the water after the violation, not thepossible economic benefits the polluting company contributes tothe local community.In environmental cases, the assessment of the harmed valuemust to some degree take into account the sensitivity of theparticular environment. In the Canadian sentencing practice thecourts have regarded the harm to sensitive ecosystems such as theCanadian north as more serious than the harm to other areas. 474Although the relevancy of the factor is indisputable, it carriescertain dangers the sentencing judge must be aware of; for onething, classifying some ecosystems as more sensitive and thusworthier of protection efforts than others is morally a somewhatdangerous exercise. The ultimate value should be the protectionof all environment and all ecosystems without discrimination.473. Sentencing in Environmental Cases, supra 127 at 17.474. See R. v. Kenaston Drilling, supra 164; R. v. United KenoHill Mines, supra 94.224Selective protection leads to decisions in which the fact that alake is, in judge's opinion, "a poor quality fishing area"(because it is inhabited principally by catfish) is regarded as amitigating factor in sentencing. 475 This kind of selectiveprotection can lead to a situation where only clean and untouchedareas are considered worth protection while pollution on damagedsites is regarded as trivial.A distinguishing feature of environmental offences is thatthey often involve multiple victims. This raises the questionwhether the number of victims should be taken into considerationas an aggravating factor. Schleger suggests that while the numberof victims does not concern the gravity of the harm per se, themultiple victimization should be taken into consideration whendetermining the extent of the harm. Hence, "[i]f two offences areranked similarly with respect to the harm typically caused orrisked, but only one involves multiple victims, the act involvingmultiple victims would...merit more severe punishment. "476Anther typical feature of environmental offences is thecollective and cumulative nature of the harm done. Air pollutionis a typical example of such harm; while the harm to a singleindividual is small, the collective harm may be extensive. Also,due to the cumulative nature of the pollution, it is impossibleto estimate the extent of the harm. For instance, how can acumulative toxic in a food chain or a loss of a recreational areabe evaluated? Also, what is the share of an individual polluter475. R. v. Cyanamid Canada Inc., supra 181 at 40.476. Supra 35 at 103-04.225in this process? Obviously, an "environmentally conscious" judgedoes not stare only at the concrete harm done to concrete peoplebut takes into account both the collective harm and thecumulative nature of the harm because[t]he destruction of any ecosystem is a gradual process, effectedby cumulative acts - a death by thousand cuts, as it were. Eachoffender is as responsible for the total harm as the last one, whotriggers the end. The first offender can't be allowed to escapewith only nominal consequences because his input is not as readilyapparent. 4775.2.3.2. CulpabilityAs noted above, in corporate offences the degree ofculpability should be determined on the basis of corporatepolicies and operations. In addition to forming an element of acorporate offence, corporate guilt must also be taken intoaccount in sentencing; if evidence that the corporation hasbehaved intentionally can be established, the corporationdeserves the highest degree of blame and, if the harm isconstant, would receive the most severe sanction. Similarly, ifthe evidence shows that the corporation's policies and practiceswere negligent, the corporation merits a lower penalty by virtueof the reduced blameworthiness. 478Although the assessment of culpability is always dependanton the facts of each particular case, some general guidelines canbe drawn by defining certain factors that can be regarded asindicating "greater" or "lesser" blameworthiness. Such factors aspersistent non-compliance, disregard of prior warnings, taking of477. R. v. Panarctic Oils, supra 124 at 85.478. See, Schleger, supra 35 at 117-133.226a calculated risk, and signs about attempts to cover the illegalactivity belong to the "more blameworthy" end of the scale. Also,repeated failures to take remedial action can be regarded asevidence of a cavalier attitude. The conduct is likely to be atthe other end of the scale if there are signs about honestefforts to comply. Also the fact that the corporation actedpromptly right after the accident by either voluntary reportingthe accident or by acting to mitigate the damage can be takeninto consideration as a mitigating factor.The corporate structure offers several different elementsthat can be utilized in the assessment of intent. These elementsinclude both written and informal corporate policies, corporategoals and objectives and the ways they are pursued, and thegeneral corporate attitude towards enforcing and implementinglaws and regulations. EquityAn important aspect of proportionality is the requirementthat similar offences must be treated the same, that is,offenders whose crimes are similar in harm and culpability mustbe punished with equal severity. Equity increases both thepredictability and uniformness of sentencing. Equal treatment isalso an important element of a fair and legitimate sentencingsystem; to treat those involved in similarly reprehensibleconduct differently, or to punish for serious offences moreleniently than for less serious offences would distort the227condemnatory implications of penalty and render the treatmentunjust. 479It is obvious, however, that the requirement of equaltreatment consists of more than mere uniform sentences. Becausethe penalty depends on pain, one view of equality is that theamount of pain inflicted on identical offenders should be thesame. 480 With corporate fines and other monetary penalties thisrequires that the corporations' ability to pay must be taken intoconsideration when assessing the size of the penalty. The FinnishTask Force suggested that such factors as the size of thecorporation, its financial stability and financial results shouldbe taken into consideration when assessing the corporation'sability to pay. Also, if corporate income is divided unevenlyover certain periods of time, this should be noted in theassessment. When doing such assessment, the correctness of thecompany's financial statements must naturally be verified. In R.v. Panarctic Oils Ltd., the court noted that when impecuniosityis at issue in sentencing, the convicted corporation should beobligated to tender evidence to that effect. Otherwise, the courtwill take judicial notice of the size and wealth of thecorporation. 481The equal treatment of offenders is made difficult by thevast diversity of environmental offences and offenders. The479. von Hirsch, supra 440 at 36.480. See, John Wilson, Re-thinking Penalties for CorporateEnvironmental Offenders: A View of the Law Reform Commission ofCanada's Setencing in Environmental Cases. (1986) 31 McGill LawJournal 313 at 316.481. Supra 124 at 86.228Canadian Sentencing Commission has recommended sentencingguidelines for Criminal Code offences. The Commission alsoproposes written reasons to be provided every time the judgeimposes a sentence which departs from the guidelines, and a listof mitigating and aggravating factors that would serve as theprimary grounds to justify such departures. 482 The idea ofguidelines could be of particular value in environmentaloffences. Since environmental offences are generally quitedifferent from so called traditional crime, special guidelinesdrafted specifically for environmental offences might be the bestand most concise solution.5.3. FinallyAn impressive amount of literature has been written from aperspective which opposes the use of penal sanctions to enforceenvironmental laws and regulations, and at least an equal numberof scholars have devoted time and effort to show theimpossibility of controlling corporations through criminalmeasures. 483 Judging from all this criticism, it would appearimpossible to bring the two together, that is, to use criminalliability to increase corporate compliance with environmentallegislation. Yet, this is exactly what the two countriespresented in this thesis have done; corporations have been482. Sentencing Reform, supra 118 at 269-333.483. See, for example, Kerraghan Webb, "On the Periphery: TheLimited Role for Criminal Offences in Environmental Protection"in Into the Future, supra 11 at 58; Wilson, supra 480;Developments in the Law, supra 10 at 1365-75.229prosecuted under environmental statutes for years in Canada, andone of the most important areas to which the Finnish legislatorhas desired to apply the proposed corporate criminal liability isenvironmental offences.As the evaluation in chapter 4 disclosed, the two endeavorsto employ corporate criminal liability to environmental cases hasnot been altogether successful. The two most predominant problemsappear to lay in imposing penal liability on a non-human entity,and finding a just and efficient sanction to meet the vastdiversity of environmental offences and offenders. In thischapter I have sought to suggest solutions to these problems, andfurther develop the law on corporate criminal liability and itsapplicability to environmental offences.The first part of this chapter was devoted to building analternative framework for imposing criminal liability on acorporation. The predominant difficulty with the Canadian systemparticularly but also with the Finnish approach appeared to bethe strong dependance on individual guilt. In both systems, inthe end, the element of guilty mind had to be found from anindividual corporate agent. As we have seen above, in practicesuch reliance on individual guilt connotes unfairness because, onone hand, corporations are treated in a similar manner regardlessto their efforts to prevent lawless behaviour; and on the otherhand because big corporations are better endowed to hide theirdirecting minds and thereby avoid liability than their smallercompetitors. Even more serious, however, is the system'sinability to emphatically convey that the object of the criminal230proceedure and therefore the denounciation is the corporation,not the individual. A system built on individual guilt discountsthe fact that corporate offences often result, not from anisolated act of an individual, but from faulty corporate policiesand complex interactions of many corporate servants.While the Finnish law proposal is more progressive by makingcorporate liability dependent on the standard of corporatepolicies and operations, it too falls short by resorting to thecriminal conduct of an individual agent. Since in reality findinga guilty individual is often impossible, the legislator has donesome pretty questionable legal "acrobatics" by inventing theconcept of anonymous guilt.Such "acrobatics" as well as the other problems connected tothe requirement of individual guilt could be avoided by takingthe Finnish approach a step further, and treat blameworthycorporate policies and operations as a proof of genuine corporateguilt. Thus, the standard of corporate policies and structureswould be the decisive factor when determining corporateliability. Since the guilt of an individual would no longermatter, anonymous guilt would become unnecessary. Also, since theliability would be dependent solely on the corporation's ownvoluntary actions, both predictability and fairness of the systemwould be enhanced. Such a system may also inspire more uniformenforcement by forcing the prosecutor to select only those casesthat imply genuinely blameworthy corporate policies behind theillegal conduct.231The second big problem revealed in chapter 4 was thedifficulty of finding an appropriate and effective sentence forthe diversity of environmental offences and offenders. In thesecond part of this chapter such a sentence was pursued byemploying an assortment of sentencing options. The selectedoptions were meant to reflect both utilitarian and retributivesentencing objectives as well as to encourage compensation andredress. The strong emphasis was laid on the condemnatory aspectsof a penal sanction; it was pointed out that since the particularbehaviour has been prohibited and a penal sanction has beenattached to it, the sentencing must, in addition to aiming atpreventing further offences, emphatically denounce the forbiddenbehaviour. If no such denounciation is expressed in a sentence,the seriousness of the offence becomes underestimated andinhibitions against non-compliance are weakened.The sentencing options with clearly condemnatoryimplications may be left unutilized if the system as a whole doesnot emphatically enough convey the blameworthy nature of theparticular conduct. The system based on individual guilt fails toreflect the corporate blameworthiness and undercuts thejustification for imposing severe sanctions on corporations.Founding corporate liability on corporate fault offers a way toattribute guilty mind to the corporation in a way that iscorporate in orientation. Once the genuine corporate guilt hasbeen established, it becomes justified to call attention to thisguilt, and use sanctions that reflect the fault of corporatepolicies. The principle of proportionality secures that the232severity of the sanction is no more than the offender deservesconsidering the harm caused and the guilt entertained.Bringing increased attention to the blameworthiness ofcorporate policies and operations is of particular importancewith environmental offences. Criminal measures can carry specialpower in conveying the message that pollution is not aninevitable by-product of otherwise useful corporate activities. Acorporation whose policies encourage non-compliance withenvironmental legislation is not operating in a sociallyacceptable manner and must be condemned for it. Such publicdenounciation emphasises the value of the environment and turnsthe environmental legislation from mere statements to legallybinding laws.233APPEDIXUnofficial translation of the proposed chapter 9 (the author'stranslation)Chapter 9: CRIMINAL LIABILITY OF CORPORATE BODIESS. 1. Corporations, foundations and other legal persons shall besentenced to a corporate fine for crimes committed in thecorporation's sphere of activities. This chapter shall only applyto those Penal Code crimes that specifically refer to thischapter.This chapter shall apply to large unincorporated privateentrepreneurs whose organizational structure is similar to thatof an incorporated entity.S. 2. This chapter shall not apply to the exercise of publicauthority.With regard to death estate, bankrupt's estate, non-profitassociations, foundations and religious communities, this chaptershall only apply to the crimes committed in the entity's businessoperations.S. 3. A corporation shall be sentenced to a corporate fine if,1) it has neglected to make reasonable effort, in thecircumstances, in selecting and organizing personnel andproviding for their supervision and training, or it has otherwisebreached its duty to arrange its operations in accordance withlaws and regulations,2) the breach of corporate duty has provided an opportunityfor the commission of a crime or at least considerably increasedthe prospects of a crime being committed,3) the crime can be imputed to an individual agent.A corporation shall be sentenced to a corporate fine even ifthe individual agent can not be identified or prosecuted.S. 4. A crime is imputable to a corporation if the individualagent has acted on behalf of the corporation or for the benefitof the corporation, and he belongs to a statutatory or other bodywith decicion-making power, or he is a corporate employee, agent,or contractor.S. 5. The minimum corporate fine is 5,000 FMK and the maximumcorporate fine is 4,000,000 FMK.234S. 6. The nature and extent of the breach of duty described in s.3 and the corporation's ability to pay shall be taken intoconsideration when determining the size of the corporate fine.The type and seriousness of an offence, the extent ofcriminal activity, the position of the individual agent withinthe corporation, general disregard for laws and orders manifestedin corporate activities as well as general aggravating andmitigating factors provided elsewhere in the law shall be takeninto account when appraising the nature and extent of an offence.The size of a corporation, its financial stability, itsfinancial results and other relevant factors shall be taken intoconsideration when assessing the corporation's ability to pay.S. 7. The prosecutor may refrain from prosecuting the offence ifthe breach of duty described in s. 3 has been insignificant, andthe corporation has made the necessary efforts to rectify theproblem, and the offence has caused only small damage or danger.If it is obvious that the prosecutor will refrain from theprosecution, the police or other government agent may refrainfrom reporting the offence to the prosecutor.S. 8. If the corporation's breach of duty has been insignificant,the court may refrain from imposing a penalty when1) the offence has caused only small damage or danger, or2) a penalty would cause unreasonable hardship or bepurposeless considering the other consequences of the offence andcorporations efforts to rectify the problem, remove or remedy thedamage and help in solving the offence.S. 9. In case of an unincorporated private entrepreneur, thecourt may refrain from imposing the corporate fine or reduce thefine to an equitable amount if the individual entrepreneur issentenced for the same offence.


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