Opinion

Corporate liability for human rights abuses

Leïla Choukroune | Updated on November 01, 2012 Published on November 01, 2012


While all eyes are on the two candidates in the American presidential election race, another heated debate is taking place at the Supreme Court of the United States. The expected decision in Kiobel v. Royal Dutch Petroleum (Shell) could have direct consequences for many multinational companies operating in high-risk areas and facing human rights issues.

Esther Kiobel sued the Anglo-Dutch enterprise, through its Nigerian subsidiary Shell Petroleum Development Company of Nigeria (SPDC), in the US courts for alleged complicity with the Nigerian military in acts of torture and murder committed against the Ogoni community.

Her husband, Barinem Kiobel, an Ogoni activist involved in the denunciation of the environmental disaster allegedly caused by Shell’s extractive activities in the Niger Delta, had been arbitrarily detained and sentenced without a fair trial to the death penalty and quickly executed.

GLOBAL TORT CLAIMS

With no direct link with the US, the complaint, as nearly a hundred other lawsuits today, was based on the reactivation of the Alien Tort Claims Act (ATCA) and its application to businesses.

Adopted in the context of the Judiciary Act of 1789, the ATCA was initially intended to allow US courts to adjudicate on violations of the “law of nations”, or a situation in which the United States is a party, but the violation is committed by an alien outside US territory. The text of the ATCA remained dormant for two centuries. In 1980, the lawyer Peter Weiss, reactivated the issue of using ATCA in a case between the family of a victim of the Paraguayan dictatorship and his torturer, a Paraguayan living in New York. Recognising the possibility for the US judge to apply “customary international law”, the Filartiga v. Peña-Irala case opened up many opportunities for victims of human rights abuses.

Fifteen years later, a group of victims of the Burmese military regime filed a complaint against Unocal for alleged complicity in acts of forced labour, rape, torture and murder during the construction of a pipeline that also involved the French company, Total. Eventually, it was settled out of court.

CORPORATE OPPOSITION

With no less than 82 “amicus briefs”, the Kiobel case echoes the magnitude of business concerns in the absence of a clear international legal and judicial framework. The issue of the extraterritorial application of law is obviously at the heart of these submissions.

If Shell’s brief is to oppose the use of ATCA against companies, including US enterprises, other briefs, at first sight, are surprising. For example, a group of investors is using the text to challenge companies on their corporate social responsibilities. This also includes a firm clarification by John Ruggie, the former Special Representative of the UN, against Shell’s biased reading of its “Guiding Principles on Business and Human Rights”.

Less surprising, perhaps is the submission of the “US-China Law Society”, which argues strongly against any extra-territorial use of the ATCA, hence implicitly supporting a very restrictive interpretation of international law.

This is in accordance with China’s official position against a universal jurisdiction, as being a possible intrusion in the “internal affairs” of Chinese multinationals.

What is the impact of these global judicial episodes on multinational corporations? One could take a very cynical stance based on the recent impressive performances of Shell, now the second world energy company, and argue that these corporate giants remain immune.

But recent history also shows that the 500 lawyers employed by Texaco to help it put an end to its Ecuadorian nightmare are not exactly costless or positive for the company’s image and its shareholders.

Some responsible businesses seem to have learnt the corporate liability lesson. What would happen if the US judge decides to restrict the use of ATCA against companies by stipulating, for instance, prior exhaustion of domestic legal remedies?

The US will perhaps not serve as the world jurisdiction, but other avenues will be explored, the example being the civil trial now being held against Shell in the Netherlands.

(The author is Professor of International Economic Law, University of Maastricht Law Faculty.)

Published on November 01, 2012
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