Rights as Usual

This blog post by Prof. Hassan M. Ahmad and Heera E. Sen is part of a Blog Series on Colonization in, of and through Business and Human Rights published on Rights as Usual. Prof. Hassan M. Ahmad is Assistant Professor, Peter A. Allard School of Law, University of British Columbia (Canada). Heera E. Sen is a JD Student, Peter A. Allard School of Law, University of British Columbia (Canada).

*********************************

Business and human rights proponents—from scholars to activists to politicians—have lauded the potential of private law liability to hold corporations accountable for past harms.  At the same time, litigation has the potential to curtail corporate behaviour such that large multinational corporations (“MNCs”) adopt policies that treat labourers, communities, and the environment more justly—particularly in Global South nations where many MNCs operate. Yet, predominantly tort-based attempts at liability to syphon money from MNC revenues to injured victims have been an uphill challenge and often unsuccessful. Authors have written, for instance, about the “jurisdictional vacuum”, “governance gap” and “missing forum” in transnational business and human rights litigation. Would it be a surprise to know that these types of gaps in the law are not new and, in fact, existed in their own way for the initial “MNCs”—powerful joint stock chartered companies that operated in what would become European colonies? In this post, we discuss the various ways in which the “mother of all corporations”—the East India Company (“EIC”)—evaded liability for its routinely egregious harms against inhabitants of the Indian subcontinent.

The EIC, like the Dutch East India Company, Royal African Company, Hudson’s Bay Company, and others, gained its legal recognition through royal charters that were granted by European monarchs. After multiple unsuccessful attempts, on December 31, 1600 a group of London merchants secured a charter from Queen Elizabeth I as permission to sail to the East Indies. That charter stipulated that the ‘Governor and Company of Merchants of London Trading into the East Indies’ would enjoy a trading monopoly for a period of 15 years (see Copy Letters Patent of Elizabeth I). Eventually, with a private army, a governance structure, and the ability to collect tax revenues from Indian farmers and landowners—powers endowed and supported in several of its royal charters secured from the British Crown—the EIC became more than a trading business with various posts across the Asia pacific.

Thomas Hobbes once characterized royal charters as gifts from the sovereign that both suspended and established legal order. For him, they were not law, but “exemptions from law.” That statement rang true of the EIC’s charters. For two and a half centuries, its continued charter-backed reign in the east rendered it exempt from liability. Victims subjected to acts of torture, arbitrary detention, pillaging, de facto slavery, and the like had no basis under the law to exact recompense from the EIC—not because the idea of compensation did not exist under the law at the time—but because the EIC (and other chartered companies) was deemed a quasi-state actor that, like the King of England, could do no wrong (see Hogg, Liability of the Crown).

The EIC’s exemption from liability for harms committed in the east as part-sovereign part-corporation can be classified into three broad “immunities”: i) Institutional Immunity; ii) Doctrinal Immunity, and iii) Organizational Immunity. The first rendered the EIC above the law in the adjudicative institutions it established pre-1773; the second carved out a doctrinal exception under British common law for quasi-governmental interactions with non-Europeans post-1773; and the third distanced the EIC’s decisions and personnel from the site of harm.  These three immunities each flowed from the company’s royal charters and created a robust shield that protected the company’s revenues from legal claims that could otherwise be brought by those who the company routinely harmed in the course of its governance and business operations.

I.                   Institutional Immunity

From the EIC’s early charters in the 17^th century, the Crown authorized it to establish courts of civil and criminal jurisdiction (“Company Courts”) that functioned alongside existing dispute resolution mechanisms in colonized territories (“Colonial Courts”). The array of Company and Colonial Courts—some of which adjudicated disputes exclusively among British and European litigants and some exclusively between non-European litigants—did not contemplate the prospect of civil claims against the EIC as a separate legal form. Whereas individuals could be subjected to civil claims, the EIC was viewed as the sovereign that facilitated justice but was not subject to it. Under this immunity, there was an implicit understanding that to effectively administer ‘presidency zones’ (territories initially under direct EIC rule and eventually British government rule) and the mofussil (country stations and districts outside of direct EIC rule) the EIC would have to be above the law. As such, the judicial system in the EIC’s territories pre-1773 was used more as an arm of the company’s power and interests rather than a viable avenue for colonized subjects to seek redress.

At the time, the prevailing understanding under English law was that corporations could sue and be sued. Yet, the judicial systems the EIC established in the eastern territories where it did business and eventually governed did not allow for the corporation as a separate entity to be held liable, either in its own regard or though concepts of vicarious liability that were recognized in England at the time. In the 17^th and early 18^th centuries, the EIC was characterized as the creator and maintainer of judicial institutions but not itself subject to their jurisdiction. Victims of egregious harms—namely slaves transported to the company’s port cities via the Indian Ocean and labourers on the EIC’s plantations—did not have a legal basis to sue the company for the damages they incurred.

The Institutional Immunity’s protective dynamic is likewise illustrated through what was known then (and still known) as the petition of right. In theory, that avenue of redress provided a means for British subjects—included subjects of the EIC’s governance in the east—to claim against the company. However, it manifested with a number of discretionary exceptions that left the Crown to decide which claims could, in fact, proceed to the point of adjudication.  Pre-1773 case law substantiates that this avenue was practically limited to Britons all but ensuring that the EIC could operate without fear of legal repercussions for its actions in the territories it controlled. In the petition of right, we see the law’s racial logic at the time vis-à-vis colonized eastern subjects. As Radhika Mongia notes, one method by which the law is crafted without specifically citing race is through regimes of judicial liberalism dependent upon bureaucratic discretion. She writes that “[s]uch caveats serve as a way to incorporate exceptions into the rule and shield decisions on such exceptions from judicial review.”

II.                Doctrinal Immunity

Recognizing the need for governmental oversight of the EIC’s operations in the east after several crises over the course of the 18^th century related to corruption and lawless governance, in 1773 Parliament passed the Regulating Act, which established appellate-level courts with British judges in India that applied the common law (“Crown Courts”).However, these new Crown Courts layered the EIC’s pre-existing immunity with a new form of protection—a Doctrinal Immunity—that permitted civil claims to be commenced against the company as a separate corporate form, but consistently exempted the company from liability in disputes that involved non-European plaintiffs. Effectively, the Doctrinal Immunity, like the Institutional Immunity before it, continued the impenetrable barrier to compensatory redress that existed for the Crown’s eastern subjects.

What can be termed a ‘corporate-sovereign exemption’ under the law at the time, the EIC took the position in Crown Courts that it embodied a unique status as a corporation that was also an extension of the Crown in the east. And in a number of cases, Crown Courts accepted that logic. In Campbell v. Hall, the Court held that British laws that rendered the Crown immune to private law claims governed inhabitants of conquered territories. In Commaul al Deen Ali Khan v. Goring, the Crown Court held that since Calcutta was governed by the EIC—at the behest of the Crown—the company would be deemed as an extension of the Crown for its interactions with non-Europeans. Other cases in the post-1773 era solidified the Doctrinal Immunity. In Nabob of Arcot v. East India Company, the Court held that the EIC, while a trading company in England, operated as a sovereign extension of the Crown in India. Therefore, it was immune from suit. Even after the EIC lost its trading monopoly in the east, Crown Courts continued to interpret it as an agent of the Crown. Bank of Bengal v. the United Company and Dhackjee Dadajee v. East India Company maintained this facet of the EIC’s protective shield.

Contrary to the above cases that rendered the EIC immune from suit as a sovereign extension of the Crown in the east, those same courts affirmed that the EIC could be liable in cases that involved British plaintiffs or non-governmental matters. In Moodaly v. East India Company, the court dismissed the EIC’s quasi-sovereign defense in a commercial contract dispute. Similarly, in Udney v. The Honourable East India Company, a retired British civil servant’s claim for unpaid pension was allowed to proceed, highlighting a differential treatment based on nationality and race. The ‘Patna Case’ is perhaps the most well-known example that affirms the Doctrinal Immunity. There, Nauderah Begum successfully sued racialized EIC officials for assault, battery, and false imprisonment even though there was no basis to hold the EIC liable as a corporate form.

III.             Organizational Immunity

The third type of immunity from civil suit from which the EIC benefited can be termed the Organizational Immunity. Under that head of immunity, the EIC’s organizational structure protected it from being held liable for violent and abusive acts against its Indian subjects. In short, the EIC distanced itself from acts of violence, which were instead attributed to Indian intermediaries. This strategic delegation of responsibility and blame is seen in two distinct but related regimes: dissimulative revenue violence and privatized labor violence.

In the course of collecting tax revenues from Indian landowners and farmers, the EIC masterfully distanced itself from the brutality that ensued. Tahsildars (local Indian officials responsible for revenue collection on the EIC’s behalf) were typically blamed and penalized for misconduct whereas their British supervisors tacitly condoned violence yet projected ignorance and, alongside the corporate form, remained unscathed. This deflection or distancing of liability aligned with a broader historical narrative that portrayed British officials as being unwittingly entangled in the purportedly corrupt practices of their Indian subordinates, despite these officials relying on Indian functionaries to meet revenue targets. This racial trope persisted in government documents like the 1855 Madras Torture Report¸ which was published pursuant to a Parliamentary investigation into approximately 500 brutal acts of violence and torture committed by British and Indian police and collection officials. The report characterized torture as antithetical to British moral and governance standards, suggesting such practices were unique to Indian officials.

In its privatized labor violence, the EIC facilitated the transfer of labor to near and distant lands, all the while insulating itself from any legal repercussions for the endemic violence that ensued in those destinations. For instance, over a five-year span in the mid-1800s the company managed the transfer of tens of thousands of Indian laborers, many of whom faced extreme violence on plantations where overseas landowners acted with impunity. Through master and servant laws, the EIC set up a legal framework that held individuals accountable for abuses within employment relationships, deliberately sidestepping the company’s complicity in sanctioning those very employment dynamics. These laws granted employers considerable power over their employees. Oppressive contractual obligations were often enforced through harsh physical punishment.While, in theory, individual servants had the right to pursue legal action against their masters, the EIC—the orchestrator of these relationships—was considered too remote in the law to be liable for employment-related harms.

In conclusion, the three above-mentioned immunities the EIC enjoyed—each being distinct in its manifestation, but only possible because of the EIC’s chartered status—exemplified the political economy of the time. The EIC was left to conduct its business and governance-related activities largely unaffected by the law’s mediating force. The difficulties plaintiffs today face in domestic courts to hold MNCs accountable for transnational human rights and environmental harms (not the focus of this post) are not an exact analogy to the corporate immunities of the colonial past. We have evolved from a world of empire to a world where, ostensibly, sovereign states are equal under the law. However, the overarching results for victims harmed in the periphery and the law’s tendency to protect corporate interests bear resemblance to a previous time. As such, today’s governance gap may, in fact, be reproducing colonial patterns in a post-colonial world.