Defining the Boundaries:

1. Defining the Boundaries: The Use of Private Contractors in Contingency Operations American Bar Association Annual Meeting August 9, 2008

2. Contractors on the Battlefield:What Laws Apply? Karen L. Manos Gibson, Dunn & Crutcher LLP

3. Contractors on the Battlefield:What Laws Apply? • Potential Sources of Applicable Law • Host Nation Laws • U.S. Laws • Law of Armed Conflict

4. 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

5. 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.

6. 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

7. 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.

8. 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.”

9. What Laws Apply?Law of Armed Conflict • LOAC coverage is unclear • What laws apply? • What is the status of private security contractors?

10. 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.

11. 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

12. 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

13. 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

14. 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

15. 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?

16. 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

17. 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

18. 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 and International Law, 42 Columbia Journal of Transnational Law 521 (2004)

19. 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

20. Civil Lawsuits Against Private Contractors in Contingency Operations: Available Defenses Peter H. White Mayer Brown LLP

21. 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

22. 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

23. 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

24. 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

25. Civil Suits vs. Private Contractors: Available Defenses Are 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

26. Lawsuits Against Private Contractors: A European Perspective on Immunities James MacGuill President, Council of the Law Society of Ireland

27. Foreign Contractors: Jurisdiction, Internal Investigations and Congressional Oversight David Hammond Crowell & Moring LLP

28. 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?

29. 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

30. 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

31. 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)

32. 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?

33. Practical Issues • Responsible contractors embrace accountability • The human condition • Multiple stressors • Cultural differences • Language barriers

34. 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)

35. 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

36. Practical Issues • Congressional oversight (continued) • Congress does not recognize the attorney-client privilege or work product doctrine* *except in Congressional proceedings against Members

37. 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”

38. 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

39. 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

40. “Tools in the Toolbox”: The Government’s Civil and Administrative Remedies Against Contractors Performing In War Zones Ronald A. Schechter Arnold & Porter LLP

41. 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

42. 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.

43. 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

44. 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

45. 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”

46. 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

47. 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.

48. 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.

49. 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.

50. 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.