Defining the Boundaries:

American Bar Association

Annual Meeting

August 9, 2008

The Use of Private Contractors in Contingency Operations

Contractors on the Battlefield:What Laws Apply?

Karen L. Manos

Gibson, Dunn & Crutcher LLP

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Contractors on the Battlefield:What Laws Apply?

Potential Sources of Applicable Law

– Host Nation Laws

– U.S. Laws

– Law of Armed Conflict

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What Laws Apply?Host Nation Laws

Absent a status of forces agreement (SOFA) or other international agreement specifically addressing civil and criminal jurisdiction over contractors, contractors and their employees are subject to all of the host nation’s laws

– Problematic when host nation government is not functioning

Most SOFAs do not address contractors

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What Laws Apply?U.S. Laws U.S. criminal laws generally do not have extraterritorial effect.

– Most federal criminal laws cover only those offenses committed within the special maritime and territorial jurisdiction of the United States as defined in 18 U.S.C. § 7

Both the US War Crimes Act and the federal anti-torture statute permit the prosecution of crimes committed either by or against US nationals abroad. – The War Crimes Act of 1996 (18 U.S.C. § 2441) makes it a criminal

offense for U.S. military personnel and U.S. nationals to commit grave breaches of the 1949 Geneva Conventions and specified violations of Common Article 3 to the conventions, including torture and cruel and inhumane treatment.

– The federal anti-torture (18 U.S.C. § 2340A) provides for the prosecution of a U.S. national or anyone present in the United States who, while outside the United States, commits or attempts to commit torture.

Recent legislation has expanded reach of federal criminal laws.

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What Laws Apply?MEJA 2000: Military Extraterritorial Jurisdiction Act (18 U.S.C.

§§ 3261 – 3266)

– Establishes federal criminal jurisdiction over felony-level offenses committed outside U.S. by DoD civilian employees, DoD contractors and subcontractors and their employees, and dependents residing with the foregoing

2004: National Defense Authorization Act for FY 2005

– Redefined MEJA definition of persons “employed by the Armed Forces outside the U.S” to include employees and contractors/subcontractors and their employees of any federal agency or provisional authority whose employment relates to supporting the DoD mission overseas

– Dependents not included

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What Laws Apply?USA PATRIOT Act Uniting and Strengthening America by Providing

Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001

Expanded definition of “special maritime and territorial jurisdiction” to include:– premises of U.S. diplomatic, consular, military or other U.S.

government missions or entities in foreign states; and

– residences in foreign states and land used for purposes of the missions or entities, or used by U.S. personnel assigned to the missions or entities

This was the jurisdictional basis used to convict David Passaro – a contractor working for the CIA – of assault for killing a prisoner at Asababad Asababad Base in Afghanistan in June 2003.

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What Laws Apply?UCMJ

2006: John Warner National Defense Authorization Act for Fiscal Year 2007 amended 10 U.S.C. § 802(a)(10)

– “The following persons are subject to this chapter:

– (10) In time of declared war or a contingency operation, persons serving with or accompanying an armed force in the field.”

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What Laws Apply?Law of Armed Conflict

LOAC coverage is unclear

What laws apply?

What is the status of private security contractors?

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What Laws Apply?Applicability of LOAC

9/11 attack by non-state actors

War in Afghanistan produces al Qaida and Taliban detainees who are captured and transported to Guantanamo Bay

Proper legal status for detainees is debated

– Geneva Conventions applicable?

– Prisoners of war?

– Unlawful combatants?

Scenes at Camp X-Ray stirred allegations of inhumane treatment, intimations that might makes right, etc.

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What Laws Apply?Defining “Armed Conflict”

International Armed Conflict

– Defined by Common Article (CA) 2 as declared war or any other armed conflict between two or more “High Contracting Parties”

Armed Conflict Not of an International Character

– Conflict that does not meet CA 2 definition

– CA 3 applies

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What Laws Apply?Common Article 3

Applies to “persons taking no active part in hostilities”

– includes members of armed forces who are hors de combat

Such persons must be treated humanely

The following acts are prohibited:

– violence to life and person

– taking of hostages

– outrages upon personal dignity

– punishment without judicial process

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What Laws Apply?1977 Geneva Protocols

Protocol I Relating to the Protection of Victims of International Armed Conflict

– Signed, but not ratified by U.S.

– Many aspects represent customary international law

Protocol II Relating to the Protection of Victims of Non-International Armed Conflicts

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What Laws Apply?Protocol I

Expands CA 2 to include

– “armed conflicts in which peoples are fighting against colonial domination and alien occupation and against racist regimes in the exercise of their right of self-determination”

U.S. does not agree

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What Laws Apply?Status of Private Security Contractors

Are private security contractors covered by the Law of Armed Conflict?

What is their status?

– Are they combatants?

– Are they noncombatants?

– Are they unlawful combatants?

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What Laws Apply?POW Status Under Art 4

To qualify, need four indicia:

– Commanded by a person responsible for subordinates

– Have fixed distinctive sign recognizable at a distance

– Must carry arms openly

– Must conduct operations in accordance with the laws and customs of war

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What Laws Apply?Unlawful Combatants

Persons taking an active part in hostilities, who are not lawful combatants (i.e., satisfy the 4 criteria) are unlawful combatants

– May be directly targeted

– Not entitled to prisoner of war status

– May be prosecuted as war criminals

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What Laws Apply?Peter Singer’s Views Private military firms “comprise one remaining industry whose

behavior is not dictated by the rule of law, but by simple economics.”

“In fact, the only real sanction available applies not to the firms, but only to their employees, and only in very limited circumstances. If individuals working for the firms are captured, they might lose their rights provided in the general laws of war.”

“The end result is that the status of PMF’s under international law is ambiguous in that there are no regimes that exactly define or regulate them.”

P.W. Singer, War, Profits, and the Vacuum of Law: Privatized Military Firms andInternational Law, 42 Columbia Journal of Transnational Law 521 (2004)

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What Laws Apply?U.S. Obligation to Enforce LOAC GC IV, Art. 146: High contracting parties must enact

legislation to provide effective penal sanctions for persons committing or ordering “grave breaches”

GC IV, Art 147: Grave breaches are any of the following acts committed against protected persons or property:– willful killing

– torture or inhuman treatment

– willfully causing great suffering or serious injury

– unlawful deportation, transfer or confinement

– forced conscription in hostile forces

– willfully deprivation of rights of fair and regular trial

– taking of hostages

– extensive destruction and appropriation of property

Civil Lawsuits Against Private Contractors in Contingency Operations: Available Defenses

Peter H. White

Mayer Brown LLP

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Civil Suits vs. Private Contractors: Available Defenses

Types of Civil Lawsuits Against Contractors

By Detainees/Civilian Victims

– Political Attack on Iraq War/War Against Terrorism Through Litigation

– Represented by CCR/ACLU

By Employees of Contractors/Personnel Working Alongside Contractors

– Right forum?

– Application of civil standards/procedures to war zones? By the Government

By the Government

– False Claims Act/Qui tam relators

– Civil/criminal investigations

– Inspectors General

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Civil Suits vs. Private Contractors: Available Defenses

Issues Raised by Suits Against Private Contractors

Sovereign Immunity if Against US/US Officials

– FTCA exceptions (discretionary function, foreign country, combatant activities, intentional tort)

Potential Immunity Arguments for Private Contractors

– Shared common-law immunity for discretionary acts by federal officers

– Government Contractor Defense

– Preemptive effect of combatant activities/foreign country exceptions

– Derivative Feres immunity for suits by members of military

– Immunity under foreign law

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Civil Suits vs. Private Contractors: Available Defenses

Policy Questions/Defenses

Political Question Doctrine

– Is decision constitutionally committed to Executive Branch?

– Lack of judicially discoverable and manageable standards?

State Secrets

– Reasonable danger disclosure will expose matters important to national security

– Cannot be raised by contractor directly

– Requires intervention by DOJ

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Civil Suits vs. Private Contractors: Available Defenses Civil Suits Against Military Contractors Impose Substantial Costs

– Hinder effectiveness of war effort?

– Hinder government’s ability to control contractors ?

– Raise cost to retain contractors?

Result in Disputes Resolved in Ill-Equipped Forum?

– Lack of institutional experience/constitutional authority

– Application of civil rules and procedures to battlefield problematic

– Public airing of sensitive information

Practical Issues

– Conducting Investigation/Discovery in a War Zone

– Scope of Jurisdictional Discovery

– Cultural issues

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Civil Suits vs. Private Contractors: Available DefensesAre Contractors Otherwise Accountable? Subject to:

– Detailed government contracts rules and regulations

– Direct agency oversight

– Suspension/debarment actions

– Non-renewal of contracts

– Civil suits by US government FCA, fraud, non-performance, breach of contract, etc.

– Criminal prosecutions by US government

– Congressional Oversight

No Essential Right to Compensation in US Courts– No compensation if injuries caused by government officers

Lawsuits Against Private Contractors:

A European Perspective on Immunities

James MacGuill

President, Council of the Law Society

of Ireland

Foreign Contractors: Jurisdiction, Internal Investigations and Congressional Oversight

David Hammond

Crowell & Moring LLP

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Jurisdiction Over Foreign Contractors

Foreign contractor with no U.S. offices

U.S. government contracts performed outside of the United States

Alleged tort occurred outside the United States

Is there personal “general” jurisdiction within any U.S. state or federal district?

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General Jurisdiction

Does the forum state’s long-arm statute authorize jurisdiction?

Due process analysis

– Minimum contacts in the forum state?

– Does not offend traditional notions of fair play and substantial justice

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General Jurisdiction

Lessin v. First Kuwaiti Gen. Trading & Contracting Co., No. H-05-1953 (S.D. Tex. 2007)

– U.S. soldier injured in Iraq after being stuck in the head by a truck’s ramp assist arm

– Default judgment

– Motion to vacate under FRCP 60(b)(4)

– Jurisdictional facts:

Defendant hired by Huston company

Contract identified Texas law as governing law for disputes

Dismissed: not sufficient minimum contacts; burden on the foreign defendant; all evidence and witnesses in Iraq

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General Jurisdiction

Baragona v. Kuwait Gulf & Link Transport Co., CA No.: 05-cv-1267(WSD) (N.D. GA)– U.S. soldier killed in traffic accident in Iraq

– Show cause re jurisdiction

– Alleged jurisdictional facts: U.S. government contracts formed between defendant and DoD

entity located at Ft. MacPherson, GA Contracts administered from Ft. MacPherson Payments from Ft. MacPherson

Court found “personal jurisdiction” Default judgment Motion to vacate under FRCP 60(b)(4)

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General Jurisdiction

Baragona case currently undergoing narrow jurisdictional discovery

– Does merely entering a contract with the USG subject a foreign contractor to jurisdiction of the U.S. courts?

– Does unilateral action by the USG re where it administers a contract and pays a foreign contractor establish sufficient minimum contracts in the US?

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Practical Issues

Responsible contractors embrace accountability

The human condition

– Multiple stressors

– Cultural differences

– Language barriers

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Practical Issues

Internal Investigation

– War zone

– Who do you send?

– Prepare a written report?

– Rely on law enforcement report?

– Evidence spoliation

– Controlling events 7,000 miles away

Communications with injured parties or relatives of victims (a.k.a., future plaintiffs)

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Practical Issues

Congressional oversight

– Plaintiff lawyers request and obtain hearings and meetings with Members

– Hearings provide aid to the plaintiff and detriment to the defendant Free discovery and discovery before dispositive motions

Unfavorable forum for defendant

Public relations and reputation implications

– Committee may issue report of factual findings before trial

– Parallel civil or criminal proceedings

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Practical Issues

Congressional oversight (continued)

– Congress does not recognize the attorney-client privilege or work product doctrine*

*except in Congressional proceedings against Members

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Practical Issues

United States v. Phillip Morris, Inc., 212 F.R.D. 421 (D.D.C 2002)

– Committee issued subpoena for documents

– Committee chairman threaten to seek contempt

– Phillip Morris produced documents

– Subsequent civil litigation

PRIVILEGED WAIVED

– Company “failed to make efforts reasonably designed to protect and preserve the privilege”

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Practical Issues

Phillips Morris did not:

– Meet with the Chairman or committee members to voice concerns

– Request an opportunity to submit arguments on the merits of the privilege claims to the committee

– Make arguments to the committee as a whole regarding the merits of the claim

– Obtain a ruling from the Chairman on the privilege claims

– Obtain a vote by the Committee to enforce the subpoena

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Practical Issues

How do you prepare the company?

Plan ahead and think through legal issues

Create an infrastructure

Form a rapid response team

– PR, legal, investigators, lobbyists

Run simulations with the team

Expect the best from your personnel, but plan for the worst

“Tools in the Toolbox”: The Government’s Civil and Administrative Remedies Against Contractors Performing In War Zones

Ronald A. Schechter

Arnold & Porter LLP

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Enforcement Tools:What Are They?

Provisions that can put a contractor’s survival as a business in jeopardy

– Civil False Claims Act

– Suspension & Debarment

– Proposed Mandatory Self-Reporting Regulations

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Enforcement Tools:Civil False Claims Act

Penalizes contractors that knowingly present false or fraudulent claims for money to the government.

“Knowingly” broadly defined

– Actual knowledge of the information; or

– Deliberate or reckless disregard of the truth or falsity of the information.

Subcontractors can be directly liable for presenting a false claim to a prime contractor.

Prime contractor can be responsible for presenting a subcontractor’s false claim to the government.

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Enforcement Tools:Civil False Claims Act

Why does the government use it?

– Companies can’t go to jail

– Lower burden of proof

– Treble damages and civil penalties

$12,000 in actual damages = $168,000 in Civil FCA damages

Qui Tam/Whistleblower cases

Cases brought directly by the government

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Enforcement Tools:U.S. ex rel. DRC v. Custer Battles LLC Qui tam case brought case, arising out of conflict in Iraq,

by subcontractor and former employees of Custer Battles and the subcontractor

Contracts were with Coalition Provisional Authority Key Rulings

– Only claims for U.S. government funds actionable under FCA CPA was “custodian” of Iraqi funds; FCA not applicable to these

funds

– To be actionable, claims had to be presented to U.S. government official acting in official USG capacity

– CPA not a U.S. government entity; U.S. officials acting in CPA, not U.S. government, capacity

JNOV overturned $10 million jury verdict, Court rejected other claims

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Enforcement Tools:False Claims Act Correction Act

Sen. Grassley “correcting” errors in eight court cases, including Custer Battles

“Corrects” definition of “claim”

– U.S. government funds not required

– FCA applies to funds controlled or administered by USG on behalf of a third party nation

“Corrects” presentment requirement

– Presentment of false claim to any person, so long as claims is “regarding government money or property.”

Various other “corrections”

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Enforcement Tools:Suspension & Debarment

Government will do business only with “presently responsible” prime and subcontractors

Suspended/debarred companies cannot receive new prime or subcontracts/options

– Debarment is for fixed period, up to 3 years

– Suspension is an interim remedy based “adequate evidence,” pending the completion of investigation or legal proceedings

Notice of proposed debarment operates as immediate suspension

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Enforcement Tools:Suspension & Debarment Grounds for Debarment:

– Conviction or civil judgment for Fraud or a criminal offense in connection with obtaining or

performing a government contract or subcontract; Embezzlement, bribery, falsification or destruction of records, false

statements, without regard to whether related to a government contract or subcontract;

– “Serious” violations of the terms of a government contract or subcontract; or

– “Any other cause of so serious or compelling a nature that it affects the present responsibility of the contractor or subcontractor.”

Grounds for Suspension:– “Adequate evidence” of any of the above.

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Enforcement Tools:Proposed Mandatory Reporting Rules

In November 2007, the Government proposed a sweeping rule requiring mandatory self-reporting:

– A contractor must notify the Inspector General and Contracting Officer if it has reasonable grounds to believe there has been a violation of Federal criminal law in conjunction with a government contract or subcontract.

– A contractor can be suspended or debarred for failing to timely disclose reasonable grounds to believe that there has overcharging on a government contract or a contract-related violation of Federal Criminal law.

– Proposed rule contained exemptions for commercial item contracts and contracts performed exclusively overseas.

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Enforcement Tools:Proposed Mandatory Reporting Rules

On May 18, 2008, the Government dramatically expanded the scope of the proposed rule:

– Eliminated the exemptions for commercial item contracts and contracts performed overseas.

– Expanded the mandatory disclosure requirement to include reasonable grounds to believe that there has a violation of the civil False Claims Act in conjunction with a government contract or subcontract.

– Failure to timely disclose such grounds a basis for suspension or debarment.

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Enforcement Tools:Proposed Mandatory Reporting Rules On June 30, 2008, the “Close the Contractor Fraud

Loophole Act” was signed into law.

– Apparent response to Nov. 2007 proposed rule.

– “The Federal Acquisition Regulation shall be amended . . . to include provisions that require timely notification by Federal contractors of violations of Federal criminal law or overpayments in connection with the award or performance of covered contracts or subcontracts, including those performed outside the United States and those for commercial items.”

Actual “violations,” rather than “reasonable grounds to believe” a violation, and including overseas contracts apparently advertent changes.

Failure to include civil FCA probably a matter of timing.