Experts Defend US Law from Business Attack

Experts Defend Law from Business Attack
Katrin Dauenhauer - IPS 7/29/03

WASHINGTON, Jul 29 (IPS) - Human rights experts are challenging a new study that calls a key law permitting victims of international human rights abuses to sue in U.S. courts a major threat to world trade and investment.

The 86-page analysis by the Institute for International Economics, 'Awakening Monster: The Alien Tort Statute of 1789', predicts the disruption of over 300,000 jobs in the United States and two million jobs elsewhere, the loss of more than 300 billion dollars in global trade and investment, and a 70-billion-dollar drop in world economic output if Congress does not pass new legislation to clarify and limit the scope of the centuries-old law.

"The study is a guesswork. The authors itself call it a nightmare scenario. They use a piece of fiction -- John Grisham's 'The King of Torts' -- as a supplement; it must be far from reality. Making predictions for the entire world economy can only be a guesswork and has to be placed in the realm of fiction," said Sugundo Llorens of the International Labor Rights Fund, which acts as lead counsel in most of the Alien Tort suits.

"Bringing international human rights cases in U.S. courts may not be the ideal mechanism to implement human rights standards, but the nature of the problem lies not in the cases but in the imperfect mechanism by which international law evolves," added Jo Marie Griesgraber from Oxfam America at the release of the report here last week.

"Moreover, companies that endorse the Sullivan Principles -- principles to support social, political and economic justice by companies where they do business -- do not have to be threatened by the statute. Why should they be challenged if they adhere to labour standards?" she added. "The study is lacking in credibility."

The statute allows foreign plaintiffs to sue foreign or domestic individuals or companies in U.S. courts as long as the defendants are either residents or travelling in the country, so that they can be served with notice of the suit.

Enacted by the first Congress, the statute was little used in the first 190 years of its existence. But beginning in the 1980s, foreign plaintiffs have invoked the law in several class-action lawsuits for alleged wrongs that occurred outside U.S. territory.

The trend has been strongest in human rights cases but has extended to other areas of the law, like business claims under U.S. anti-trust laws.

Human rights lawyers say the success of the cases before trial judges and some federal appeals courts reflects a deepening consensus that law crosses national borders and that violations of certain fundamental rights should not go unpunished, even if only a foreign tribunal will enforce them.

But the administration of President George W. Bush recently has come to the defence of some of the companies sued under the statute, arguing that the lawsuits interfere with foreign policy and that the law has been "commandeered" to allow cases being heard that had "no connection whatsoever with the United States".

In what human rights groups see as a frontal assault on the law, the State Department wrote a submission on behalf of Unocal to dismiss a suit against the California-based oil giant, saying the action stretches the law beyond anything its authors would have recognised and undermines the "war on terrorism".

But the Department's brief was not limited to defending the company against the plaintiffs (Burmese villagers who said the firm was responsible for serious abuses committed by army troops who provided security for a company project). Instead, the document, which was submitted in May to the Ninth Circuit Court of Appeals in California, asked the court to reinterpret the Act in a way that would deny victims the right to sue in U.S. courts for abuses committed overseas.

According to the study, as of 2003, plaintiffs using the Alien Tort Claims Act (ATCA) have sued more than 50 multinational corporations doing business in developing countries, alleging more than 200 billion dollars in actual and punitive damages.

Though corporations usually succeed in getting such cases dismissed before trial, their growing number is nevertheless increasingly troubling multinationals.

The influx of lawsuits will ultimately affect the way corporations are doing business, the report says.

"ATS cases create enormous problems that, when added together, amount to unilateral justice bordering on imperialism," it states.

"ATS decisions will conflict with the jurisdictional claims of other states, particularly when both parties are citizens of the same foreign state. ATS cases will inflame relations between the United States and foreign governments, especially when foreign-based multinational corporations (MNCs) are subjected to large, American-style damage awards.''

"ATS cases will interfere with the separation of powers,'' adds the report. "Under the Constitution, the executive branch, not the judiciary, is responsible for the conduct of foreign relations."

The study recommends congressional legislation to clarify and limit the scope of ATS litigation to a short list of recognised international norms, including piracy, slavery, forced labour, war crimes, genocide, torture and extrajudicial killings.

Human rights activists say that is unnecessary.

"The courts have been careful and have not embarked on an imperialist approach ... Moreover, the suggestions are light years away from the justice department's amicus brief and so even they will not be satisfied," said Eric Biel from the Lawyers Committee for Human Rights.

And, instead of hampering the 'war on terrorism' the statute is in fact an efficient tool, its supporters say.

"The ATCA is one of the few tools available to use the rule of law to stop human rights violations, which is certainly part of the war on terror. That some of those responsible for human rights violations are U.S.-based multinationals does not make the terrorism any less real to the victims," a report by the International Labour Rights Fund states.

"Indeed, allowing such companies to act with impunity conveys the distinct message that the 'war on terrorism' is only intended to protect U.S. citizens, and that the Bush administration wants to immunise U.S. companies from the rule of law."