Introduction
Despite increasing calls by shareholders to exit Russia after its brutal and unprovoked attack against Ukraine, the French energy company TotalEnergies has opted not to entirely abandon its dealing there, most notably its stake in one of Russia’s largest natural gas producers, Novatek. Reacting to TotalEnergies’s decision, NGOs Greenpeace France and Amis de la Terre have threatened legal action, alleging that the company’s continued involvement “contributes, at least financially, to Russian aggression in Ukraine”. In addition to highlighting the potential criminal liability that TotalEnergies and its managers might face for facilitating war crimes and crimes against humanity, the NGOs also note that under the French Corporate Vigilance Law, the company has an obligation not to contribute to human rights violations.
On 22 March 2022, TotalEnergies responded to what it calls “serious and unfounded accusations of ‘complicity in war crimes’”, claiming that it is acting in a responsible manner and that it will take new steps in light of the worsening conflict. It also went on the offensive after France’s Green candidate in the upcoming presidential election, Yannick Jadot, joined accusations that the company is complicit in war crimes, saying that it would press charges for defamation.
Ultimately, it appears that TotalEnergies will continue to do business in Russia, at least for now. In light of recent accusations, this blogpost contemplates whether TotalEnergies’s continued business dealings in Russia contribute to Russia’s ability to wage an illegal war, and if so, whether there are any legal consequences.
TotalEnergies’s Involvement in Russia
TotalEnergies has been active in Russia since the early 1990s, and Russian energy sources constitute a substantial proportion of its reserves. Russian natural gas has enormous strategic importance for TotalEnergies, as the company plans to significantly increase its natural gas output in the coming decades. It holds shares in a number of Russian energy companies, and has refused to sell them after the outbreak of the war in Ukraine, claiming that this would only enrich Russian investors in contradiction with the purpose of sanctions levied against the country. TotalEnergies’s assets in Russia include a 19.4% stake in Novatek, a 20% stake in Yamal LNG, a 10% stake in Arctic LNG 2, and a 49% stake in TerNefteGaz. Novatek is Russia’s largest natural gas producer, and furthermore owns majority shares in all of TotalEnergies’s other Russian assets.
In its 22 March announcement on the new steps the company plans to take in light of Russia’s war in Ukraine, TotalEnergies proclaimed that it will “gradually suspend its activities in Russia.” However, it did not clarify what it means by “activities in Russia”, and instead only asserted that it currently “has no activity or operational responsibility” on the projects of any of the Russian companies in which it owns shares, which raises questions about what it plans to do differently in relation to its Russian activities. TotalEnergies also pledged not to enter into or renew contracts to purchase Russian oil and petroleum products, but it made no commitments to stop purchasing natural gas, citing Europe’s reliance on it and its own obligation as a European company to “contribute to the supply security of the European continent.” Finally, TotalEnergies declared that it will comply with all present and future sanctions. However, given Europe’s dependence on Russian oil and gas, it seems unlikely that European leaders will cut off Russian energy imports in the near future.
Closer examination of TotalEnergies’s involvement in Russia reveals that even after implementing its newly announced measures, it will likely continue to do significant business in Russia in the coming years. Roughly half of Novatek sales are in natural gas, and as the only European company in the enterprise, TotalEnergies is undoubtedly the lynchpin between Novatek and European consumers. Europe is Novatek’s second-largest customer after Russia, with about 30% of the company’s sales going to the region (about 50% of sales go to Russia, and 20% to Asia-Pacific). By continuing in the joint venture, TotalEnergies will continue to facilitate Russia’s access to foreign revenue from Europe.
The other entities in the Novatek joint venture are all Russian, and include: Russian tycoon Leonid Michelson (15% stake); Volga Group, a privately held investment firm that manages the assets of billionaire Gennady Timchenko, who faces US, UK and EU sanctions (23.5% stake); and Gazprom, which is majority-owned by the Russian government (9.9% stake). Therefore, TotalEnergies’s contribution to Novatek—including facilitating its access to European markets—indirectly assists the Russian government in acquiring income, both in the form of tax revenue and the revenues garnered by the Russian-owned partner Gazprom.
Russia’s war appears to be a blatant violation of international (criminal) law. The invasion of Ukraine was unjustified under international law, and therefore constitutes a crime of aggression. Furthermore, since the conflict began on 24 February 2022, the Russian military has been accused of indiscriminate and disproportionate attacks against civilians in Ukraine, including the atrocities that recently came to light in Bucha, which likely amount to war crimes.
TotalEnergies claims that it is acting in a responsible manner in Russia, but is it? There have been repeatedallegations that Europe’s purchases of Russian energy sources are funding the war in Ukraine. As Anders Fogh Rasmussen recently argued in an opinion piece for Politico, Russia is bankrolling its war with oil and gas revenues, and as such, purchasers of Russian oil and gas are “directly financing his war, and his war crimes”. TotalEnergies undoubtedly plays a role in Russia’s ability to access foreign revenue, as well as contributes to the Kremlin in the form of taxes. However, while this kind of support might be morally wrongful, it is difficult to establish the company’s legal complicity in Russia’s crimes.[1]
As a prior blogpost has articulated, contemplating how money constitutes a form of complicity presents enormous challenges. First, TotalEnergies’s overall financial contributions to Russia are difficult to evaluate. Second, money is fungible, and thus it is impossible to track where TotalEnergies’s contributions go, and what effect they have on Russia’s war. Third, the timeline of TotalEnergies’s activities in Russia should be scrutinized, especially its involvement before versus after the outbreak of the war. These issues will be briefly addressed here.
Is TotalEnergies Contributing to Russia’s Commission of International Crimes?
Recent criminal cases, such as one against the cement company Lafarge and another against the bank BNP Paribas, highlight France’s willingness to hold corporations liable for their involvement in international crimes. Both of these cases include arguments that the companies contributed to the commission international crimes, committed by ISIS and the Sudanese government respectively, through financial support.
Article 121-7 of the French Penal Code provides that a defendant may be guilty of complicity in a crime if he knowingly facilitates the preparation or commission thereof, including by providing assistance to the preparation or commission of a crime, or by instigating a crime through the provision of a gift, promise, threat, order, or abuse of power. Although the provision of money could plausibly constitute a form of assistance, specific facts must demonstrate that this money furnished the means to commit the underlying offense. For example, in Lafarge, the French Supreme Court allowed the case to go forward because it found that “Lafarge had financed, via its subsidiaries, ISIS activities to the tune of several million dollars”, noting the connection between Lafarge’s business activities directly with ISIS, and how its payment to ISIS likely made it possible for ISIS to fund the commission of its crimes. Conversely, TotalEnergies’s involvement in Russia is more complex and less direct. Its tax contributions might be relatively easy to calculate, but the benefit that TotalEnergies confers on the Novatek enterprise—and thus the Russian Federation—through its stakes in the Russian oil and gas industry and facilitation of business with Europe, is more difficult to determine. While Novatek is a joint venture with the Russian-owned entity Gazprom, TotalEnergies’s business activities likely only marginally contribute to Russia’s overall coffers. Ultimately, although TotalEnergies and Russia’s financial interests are clearly intertwined through their joint venture, it is difficult to parse out the degree to which TotalEnergies’s stake in Novatek, or the taxes it pays to the government there, translate into Russia’s ability to pay for its war in Ukraine.
Another complicated aspect of understanding how financial contributions might constitute a form of aiding and abetting is that money is fungible, and as such, it is challenging to track whether a certain payment financed a given crime. In other words, it is impossible to determine whether the money flowing into Russia from TotalEnergies will be used to pay for cluster munitions used against civilians, or for something much more benign. However, it is not necessary to show a causal connection between certain financial transactions and the commission of a criminal offense. Nonetheless, the fungibility of money does complicate the complicity analysis: if a company were supplying weapons or dual-use goods that could be traced directly to the battle field and the commission of a war crime, then it would be easier to demonstrate how that transaction may have facilitated the commission of a crime; however, in the case of money, there needs to be a higher degree of contribution or causal connection between the transaction and the offense, such as what is alleged in both the Lafarge and BNP Paribas cases.
Finally, timing is of great importance when evaluating TotalEnergies’s complicity. According the jurisprudence, if the crime is committed after the provision of aid or assistance, then there must be a prior agreement between the principal and the accomplice to commit a crime, and there is no evidence to suggest that TotalEnergies made any agreement with Russia to support its act of aggression or the war. Thus, TotalEnergies’s pre-war business engagements in Russia would arguably not constitute complicity with war crimes. Also, it had no way of knowing that its financial contributions to the Kremlin would be used to pay for a wrongful war. However, TotalEnergies should proceed with caution moving forward. Article 121-3 of the French Penal Code assigns liability if an accomplice fails to take necessary measures to prevent the harm despite knowing of a grave risk that it cannot ignore. Since the conflict in Ukraine began, Russia has only ramped up its indiscriminate attacks on civilians, and at some point TotalEnergies will not be able to turn a blind eye toward the grave risks that the Russian Federation—its business partner in the Novatek joint venture—is generating in Ukraine.
Ultimately, it is difficult to establish the degree of contribution that TotalEnergies’s is making to Russia’s international crimes by doing business there. That being said, the company should carefully assess whether it can continue to legally do business in Russia, even if its conduct does not rise to the level of criminal complicity.
Is TotalEnergies Violating Its Human Rights Due Diligence Obligations?
Criminal liability is not the only legal challenge that TotalEnergies could face for its involvement in Russia. The 2017 Corporate Vigilance Law requires large companies to identify and prevent severe human rights and environmental impacts resulting from their activities. Specifically, Article 1 of the law requires companies to establish, publish and implement a vigilance plan that lays out how it will identify and prevent risks of serious infringements to human rights or the environment. The plan must include appropriate actions to mitigate risks or prevent serious human rights violations. If a company fails to present and follow through with an adequate vigilance plan, it may be held liable for the harm the proper fulfilment of the obligation would have avoided. While the law is silent on obligations in the context of armed conflict, the UN Guiding Principles on Business and Human Rights, which provided the foundation for the French law, notes that the “risk of gross human rights abuses is heightened in conflict affected areas.”
TotalEnergies has already come under legal scrutiny twice pursuant to the Corporate Vigilance Law, first for failing to create and implement a human rights and environmental vigilance plan in relation to its activities in Uganda, and second for failing to include any reference to climate change in its first vigilance plan. In the context of its business activities in Russia, an adequate vigilance plan should without a doubt contemplate potential risks arising from Russia’s war in Ukraine. TotalEnergies and the Russian Federation (through Gazprom) jointly profit from the Novatek enterprise. As the UN Guiding Principles commentary states, “Where a business enterprise contributes or may contribute to an adverse human rights impact, it should take the necessary steps to cease or prevent its contribution and use its leverage to mitigate any remaining impact to the greatest extent possible. Leverage is considered to exist where the enterprise has the ability to effect change in the wrongful practices of an entity that causes a harm.” Ultimately, it will be up to the courts to decide what a reasonable course of conduct is in order to abide by the Corporate Vigilance Law. But TotalEnergies should be mindful that as a major facilitator of the natural gas transactions between Russia and Europe, and as a partial owner of Novatek and other oil and gas enterprises, it does exercise considerable leverage. However, as the company itself has noted, its position is tempered by its obligations to supply the European market with Russian natural gas upon which it so heavily relies.
Conclusion
TotalEnergies’s decision not to withdraw from Russia indicates that the company does not have pressing concerns about its contributions to Russia’s alleged crimes by doing business there. Indeed, the connection between TotalEnergies’s business activities and any international crimes occurring in Ukraine is far from clear. Although TotalEnergies undoubtedly does contribute to Russian coffers as a result of its business activities, to criminalize this mere fact would lower the bar for complicit conduct so far, that the mere act of conducting business in a country that commits international crimes would be rendered illegal.
However, as time goes on, TotalEnergies should be cognizant of its obligations under the Corporate Vigilance Law, and take meaningful steps to limit its contributions to Russia in any way. While it remains to be seen how the human rights due diligence obligation will be assessed in this case, TotalEnergies’s decision to continue to do business in Russia, and the criticism it has received for this decision, serve as a reminder that we must pay attention to how business activities might play a role in the commission of international crimes, especially in times of armed conflict.
[1] This blogpost generally considers complicity for the crime of aggression and war crimes, without delving into specific details about who the primary Russian perpetrators might be.
