There has been an ongoing legal battle occurring on the margins of society ever since an innocuous statute buried deep in early U.S. law was uncovered by human rights advocates nearly three decades years ago. Their goals are to expose and seek justice for atrocities committed across the world, and they began by crusading against infamous war criminals such as Radovan Karadzic, the Bosnian Serb leader who was recently dragged out of hiding to face U.N. charges for his role in the ethnic cleansing of Muslims and Croats during the Bosnian war. Now, however, their focus has moved over to corporations, and human rights advocates are seeking damages from companies they believe have been complicit in human rights abuses. No company has lost a case thus far, but many believe it is only a matter of time. And once that occurs, a floodgate of human rights lawsuits may open.
The Alien Tort Claims Act (ATCA) is nearly as old as the United States. Its entire 33-word mandate reads: "The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States."
For most of its first 200 years, the statute lay dormant with no affect on the legal system-neither domestically nor internationally. Even today, legal minds debate its origin. The First Congress signed the act into law in 1789, but numerous questions surround the lawmakers' true intentions.
Most contend that it was enacted primarily for national security and that its main goals were dealing with piracy on the high seas and protecting foreign ambassadors. Some claim it was included so as not to discourage foreign investment in the fledgling nation. Still others believe Congress sought an ideological "badge of honor" that showed the nation's willingness to make enforcing international standards a duty under domestic law.
Historians and legal minds will undoubtedly continue this debate, but ultimately, the most salient opinion probably comes from renowned Judge Henry Friendly of the United States Court of Appeals. "Although it has been with us since the First Judiciary Act...no one seems to know whence it came."
Much more important than the genesis of the ATCA, however, are the questions regarding its present and future. Today, the ATCA represents a pivotal and polarizing link between human rights and international business. For more than 15 years, human rights organizations have used a broad judicial interpretation of the act to file suit against multinational corporations including Royal Dutch Shell, Bridgestone Firestone and Coca-Cola in hopes of holding them financially and morally responsible for human rights abuses across the globe. And for more than 15 years, companies have been challenging these lawsuits, successfully getting nearly every case dismissed.
To many, the fact that these cases are even considered is foolish and each should be granted immediate dismissal. Indeed, ATCA cases can only be brought by non-U.S. citizens for acts committed outside of U.S. soil-and in cases like that against Royal Dutch Shell, against non-U.S. companies. Still, there are currently dozens of related cases under litigation and they are heard due to the act's mandate for U.S. federal courts to rule on anything, anywhere that violates that "law of nations," a phrase understood to include the agreed-upon, inalienable international standards of the world, such as the protections provided by the Universal Declaration of Human Rights or the Geneva Conventions.
The outcomes of the currently pending cases are what will determine the act's lasting significance. Based on results, it would seem companies have little reason for concern. Thus far, only one case has reached a trial decision. Ideologically, however, the most significant judicial interpretation developments have favored human rights advocates, raising the possibility that much of the corporate success has been the result of thin or overextended cases rather than any inherent weakness in the ATCA itself.
The first corporate ATCA case, Aguinda v. Texaco, Inc., was a class action suit brought in 1993 by a group of indigenous Ecuadorian citizens against oil giant Texaco (now Chevron). The plaintiffs alleged that the construction and operation of a pipeline in the area had lead to widespread environmental degradation and adverse health effects for local residents. After multiple proceedings and appeals, the case was eventually dismissed under forum non conveniens (legal grounds meaning "inappropriate forum"), the most common complaint defendants have issued to successfully dismiss ATCA cases.
Despite the flaws in the Aguinda suit, there have since been more than 40 corporate ATCA lawsuits filed in U.S. federal courts. Bridgestone Firestone, for example, has been sued for its allegedly inhumane treatment of workers in its Liberian plant. NestlŽ is fighting claims that it allegedly trafficked children to cultivate and harvest cocoa in the Ivory Coast. And in a high-profile 2006 case, Yahoo! faces allegations that it provided the Chinese government with personal information about a dissident, leading to his arbitrary arrest.
Thus far, however, only one ATCA case has reached verdict. In the case, Estate of Rodriguez v. Drummond Co., Drummond Coal Company, a coal production and exploration company that operates the world's largest open-pit mine in Colombia, was accused of providing financial and other support to local paramilitary groups, which allegedly killed three local union leaders during the course of the security operations that the company had hired members of the group for. Unlike most ATCA cases, the court rejected multiple defense motions to dismiss the case. But when the jury finally ruled on July 26, 2007, Drummond was cleared of the war crimes charges it faced.
Ironically, both Drummond and human rights activists embraced the decision. Drummond, of course, was happy to clear its name in court. But human rights advocates-led by the nonprofit International Labor Rights Fund, which helped bring the case-considered simply seeing a case reach verdict to be the first step in overcoming the legal hurdles that have plagued ATCA cases since Aguinda was filed in 1993.
Walter Tache, an ATCA expert and attorney with Zuckerman Spaeder in Miami, acknowledged as much in a subsequent interview with Time. "Getting this case to trial was a great accomplishment," he said. "It is really a wake-up call for all U.S. companies that their behavior overseas will see the light of day-perhaps even in U.S. federal courts. Once there is a successful case, the floodgates from the plaintiff's bar will open for many more."
Other recent events have also brightened the activist outlook. Two companies have opted to settle cases out of court, and many consider the first such settlement to be the most influential ATCA case yet filed against a corporation.
The plaintiffs were citizens from the rural Tenasserim region of Burma who claim to have suffered enslavement and forced labor at the hands of government military personnel and police forces during the construction of the Yadana natural gas pipeline. In the suit, Doe v. Unocal, they claimed that Unocal, a now-defunct California oil company that helped oversee the pipeline's construction, had solicited the government to provide security for its workers and was therefore directly complicit in the atrocities, which included allegations of murder, torture, rape and the forced relocation of entire communities through property seizure.
In terms of evidence of direct corporate complicity in state-sponsored human rights abuses, Unocal represented one of the strongest ATCA lawsuits ever filed. Throughout the nine years of legal actions, arguments were heard in various state and federal courts, but it was a concurring opinion in a summary judgment appeal by Judge Stephen Reinhardt of the Ninth Circuit regarding the "aiding and abetting" test that may shed the most light on the capability for future attempts to prove such connections.
The aiding and abetting test was considered the critical factor of whether or not Unocal was complicit with Burmese officials or simply a bystander attempting to build a pipeline through a country run by one of the world's most corrupt and unethical regimes. Yet, Judge Reinhardt wrote that applying and determining international criminal law standards of aiding and abetting was not even necessary, and that, rather, "federal common law tort principles, such as agency, joint venture, and reckless disregard" were entirely appropriate for ATCA cases. Additionally, the court found that the "evidence supporting the claim of reckless disregard" was satisfactory for the trial to proceed. Prior to advancing to the trial's next phase, however, Unocal settled out of court for an undisclosed sum, leaving no opportunity for a precedent to be set on these vital judicial complexities.
The other recent settlement involved produce-grower Chiquita, which agreed to a $25 million payment in acknowledgment of its illegal "security" payments to Colombian paramilitary groups that carried out targeted killings of hundreds-if not thousands-of people. (Chiquita still contends these transactions were extortion payments, not collaboration.) To Chiquita's credit, it did voluntarily announce these payments to the U.S. Justice Department in 2003, although it continued paying known terrorist groups, including AUC (United Self-Defense Forces of Colombia), to "protect the lives of its employees" until it sold its local Banadex operations in 2005. Rather than face the ATCA claims for its connections to these extrajudicial killings, however, Chiquita opted to settle.
Ostensibly, this long-standing, brief and ambiguous statute seems incapable of shaping the future of international law. Many question how the ATCA can possibly provide the jurisdictional breadth for foreign citizens to file suit in U.S. courts for actions that did not occur on U.S. soil or, in some cases, were not committed by U.S. companies.
Corporate defense attorneys, among others well-versed in law, widely see the act as an unintended loophole in an obsolete congressional statute at best, and at worst, an utter perversion of justice. Its practical interpretation, however, continues to mandate that a federal U.S. court can decide damages on any and all matters under the "law of nations."
Overwhelmingly, ATCA cases have been rooted in the most egregious human rights violations. Unless a plaintiff's case includes charges of genocide, war crimes or crimes against humanity (which include extrajudicial killings, slavery, torture and rape), litigation has generally not proceeded beyond an initial motion to dismiss by the defense.
Because of this, many human rights advocates have questioned why companies have launched such strong opposition to the ATCA. In 2004, corporate lobbying groups along with the Chamber of Commerce mobilized a campaign to sway the courts into narrowing the act's scope because it poses a competitive disadvantage to companies with a U.S. presence. The current Bush administration has also encouraged the judicial branch to limit the ATCA.
A fear of increasing litigation from a widening view of the "law of nations" is largely driving this backlash. Additionally, detractors look at previous cases, such as those brought against a wide range of banking, oil, construction, mining and pharmaceutical companies that had operations in apartheid-era South Africa, and believe that the ATCA will leave them open to liability for violations committed by repressive foreign governments of the nations where they operate, despite the fact that the company itself had no active role in any crimes committed.
Other factors could also severely disrupt the momentum the ATCA has built since 1980. The Supreme Court has yet to rule formally on any ATCA suit and in the few comments it has made on the act in the course of decisions on other cases, Justice Antonin Scalia, among others, has shown signs that he may favor a more narrow interpretation.
The executive branch has also voiced its preference for a narrow scope due to the fact that it-or at least the current Bush administration-views the act as interfering in foreign relations interests and impeding on the judicial autonomy of the sovereign nations where the violations occurred. Though a new administration will take power in just a few months, stepping on the toes of other nations is not something any president is likely to embrace.
Most importantly, the ultimate fate of the ATCA still resides in the hands of Congress. Legislators enacted the statute into law in 1789, and as the Supreme Court succinctly noted in its decision on the related case of Sosa v. Alvarez-Machain, they retain the power to "shut the door to the law of nations entirely" by means of amending the ATCA-or eliminating it altogether.
Regardless of expectations, companies must remain vigilant. The obvious solution is hardly worth mentioning-never engage in human rights violations or partner with anyone that would. For companies operating in certain volatile and less morally sophisticated regions, however, the definition of human rights becomes murky and the distinction of what constitutes a violation is far from black and white.
A definite line in the sand certainly exists, but for those trying to benefit from opportunities in places like Turkmenistan, Nigeria, Colombia or even China, there could be situations where the partners that would have to be embraced must be skeptically evaluated before any project begins.
Ultimately, however, the company is responsible for its own operations. Overlooking responsibility for profits is the easiest way to wind up on the wrong side of a human rights violations lawsuit. The current legal environment is worrisome, but the reputational risk and brand fallout associated with even ending up on an internet campaign to expose illicit corporate behavior, whether it is accurate or not, should be enough to make any chief executive shy away from the slightest hint of a violation on the scale looked at by those attempting to leverage the ATCA.
It is difficult to say with certainty what the future holds for the ATCA. With no successful verdicts to date, the enthusiasm of human rights advocates relies mostly on hopeful ideology. In legal practice, the hurdles to obtaining a decision against a company for atrocities carried out by other foreign nations remain very real.
Currently, there is simply not enough of a legal precedent on ATCA claims to accurately predict its future. In the meantime, human rights advocates are correct to embrace its possibilities and continued application just as companies are right fear the potential financial fallout if environmental or other expansive interpretations of the "law of nations" occur.
Until more rulings can clarify current judicial interpretation, however, both sides will be left speculating. And given that it took 14 years for the first corporate ATCA case to reach a verdict, any further speculation will likely remain just that for the near future.
Jared Wade is editor of Risk Management.
