Relying on the once-obscure Alien Tort Statute of 1789, trial lawyers have found a new way to make life miserable for business.
Since the early 1990s about two dozen companies have been sued for alleged complicity in abuses committed overseas–from torture in Guatemala (Del Monte) to murder in Colombia (Coke) to environmental harm in Ecuador (Texaco). The statute is being stretched so that firms operating in a normal and legal manner–albeit in a rotten place, such as apartheid South Africa–also have reason to fear being sued.
No cases have yet gone to trial. But on June 17, the U.S. Court of Appeals for the Second Circuit will decide whether a suit against Unocal for alleged human rights abuses in Burma can proceed. No one says that employees of the U.S. oil firm wanted or imposed the use of forced labor–an abuse that did indeed occur on a pipeline project in which Unocal was a minority investor. But a three-judge panel ruled last September that just because Unocal didn’t commit the abuse doesn’t mean it wasn’t responsible.
“Knowing practical assistance [as opposed to unintentional assistance] or encouragement that has a substantial effect on the perpetration of the crime” is enough to trigger liability, said the panel. The full appeals court is reconsidering that decision.
Business groups are also closely watching several suits against companies for alleged complicity in apartheid–including one brought by Edward Fagan, a lawyer best known for his involvement with Holocaust-related litigation; and one by Michael Hausfeld, a Washington lawyer acting for a South African victims’ group. Hausfeld’s complaint names 20 companies.
For example, it charges that Swiss bank UBS helped prop up apartheid by making loans to the government and that Exxon did the same by selling oil to the military. Ditto for Shell and BP. Hausfeld says the companies are not being sued “merely for doing business, but for doing business which knowingly aids and abets the furtherance of the commission of a human rights abuse.”