U.S. Supreme Court Dismisses Lawsuit Against Shell in Nigeria

In a unanimous ruling, the U.S. Supreme Court today dismissed a lawsuit against Shell in Nigeria. The lawsuit was brought by Esther Kiobel against the company for aiding and abetting the Nigerian government who executed her husband and 10 other activists in the Ogoni region of the Niger Delta.

The ruling effectively blocks other lawsuits against foreign multinationals for human rights abuse that have occurred overseas from being brought in U.S. courts.

Kiobel v. Royal Dutch Petroleum Co. (Shell) was brought under the Alien Tort Statute (ATS), a U.S. law dating back to 1789, originally designed to combat piracy on the high seas - that has been used during the last 30 years as a vehicle to bring international law violations cases to U.S. federal courts.

Lawyers began using ATS as a tool in human rights litigation in 1979, when the family of 17-year-old Joel Filartiga, who was tortured and killed in Paraguay, sued the Paraguayan police chief responsible. Filartiga v. Peña-Irala set a precedent for U.S. federal courts to punish non-U.S. citizens for acts committed outside the U.S. that violate international law or treaties to which the U.S. is a party. Almost 100 cases of international (often state-sanctioned) torture, rape and murder have been brought to U.S. federal courts to date under the ATS.

The new ruling limits the law to U.S citizens and entities.

"Corporations are often present in many countries and it would reach too far to say mere corporate presence suffices," wrote John Roberts, the chief justice of the Supreme Court, in the majority opinion. "There is no indication that the ATS was passed to make the United States a uniquely hospitable forum for the enforcement of international norms."

Stephen Breyer, another of the nine judges, agreed with Roberts in the decision but left the door open for some lawsuits. "I would find jurisdiction under this statute where (1) the alleged tort occurs on American soil, (2) the defendant is an American national, or (3) the defendant's conduct substantially  and adversely affects an important American national interest," wrote Breyer in a separate legal opinion. "(T)hat includes a distinct interest in preventing the United States from becoming a safe harbor (free of civil as well as criminal liability) for a torturer or other common enemy of mankind."

Shell - in Breyer's opinion - did not qualify as a U.S. entity. "The defendants are two foreign corporations. Their shares, like those of many foreign corporations, are traded on the New York Stock Exchange," Breyer wrote. "Their only presence in the United States consists of an office in New York City (actually owned by a separate but affiliated company) that helps to explain their business to potential investors."

To date no substantial lawsuits against multinationals for abuses overseas has been won on ATS grounds, although some have settled or plea bargained. In 1996 Doe v. Unocal, a lawsuit filed by ethnic Karen farmers against Unocal (now owned by Chevron) set a new precedent when a U.S. federal court ruled that corporations and their executive officers could be held legally responsible for crimes against humanity. Unocal contracted with the Burmese military dictatorship to provide security for a natural gas pipeline project on the border of Thailand and Burma. The suit accused Unocal of complicity in murder, rape and forcing locals to work for Unocal for free. Shortly before the jury trial was set to begin in 2005, Unocal settled with the plaintiffs by paying an undisclosed sum, marking the first time a corporation settled in any way a case based on the ATS.

Another such case was filed against Chiquita, the global banana producer, by surviving victims of brutal massacres waged by right-wing paramilitary squads in Colombia. The paramilitary, who killed thousands of civilians during Colombia's dirty war of the 1980s and 1990s, were on Chiquita's payroll in the 1990s. Now-U.S. Attorney General Eric Holder defended Chiquita in the case and won a plea bargain for them of $25 million and five years of probation.

Kellogg, Brown and Root, a former subsidiary of Halliburton, has also been sued under the ATS for allegedly trafficking 13 men from Nepal to Iraq against their will to work on U.S. miliatry bases. The men, 12 of whom were killed, believed they were going to work at hotels in Jordan and elsewhere.

The Obama administration backed Shell last June after abruptly changing sides. In its submission the Justice Department urged the Supreme Court to dismiss the suit against Shell. The brief's authors stated that the ATS was not appropriate for Kiobel or other lawsuits involving foreign corporations accused of collaborating in human rights abuses with a foreign government outside U.S. territory.

U.S. courts "should not create a cause of action that challenges the actions of a foreign sovereign in its own territory, where the [sued party] is a foreign corporation of a third country that allegedly aided and abetted the foreign sovereign's conduct," the Justice Department wrote.

Many activists say that the decision will set back human rights causes. "This decision so severely limited a law that has for decades been a beacon of hope for victims of gross human rights violations," says Elisa Massimino, president of Human Rights First, a New York based NGO. "Abusers may be rejoicing today, but this is a major setback for their victims, who often look to the United States for justice when all else fails.  Now what will they do?"

Other lawyers drew a measure of hope from the fact that the Supreme Court decision did not exclude all lawsuits against multinationals overseas in U.S. courts.

"This ruling is not a grant of immunity from liability," write the lawyers of the Center for Constitutional Rights who won the Filártiga case. "(T)hose cases brought against defendants, including corporations, whose actions "touch and concern the territory of the United States...with sufficient force" should remain on notice they can still be held accountable for their abuses outside the U.S. The Court has left many questions open for another day, and we will work to ensure that the basic purpose of the ATS - reflected in the decision - to provide a place for all victims of human rights abuses to seek justice and accountability."

Paul Hoffman, the lawyer for Esther Kiobel, told USA Today newspaper that the Supreme Court ruling would not affect the cases against KBR for human trafficking to Iraq. And Marco Simons, legal director at Earth Rights International, said the same for cases against Chiquita involving paramilitary death squads in Colombia.

Activists are now more likely to look to other countries to seek justice for abuses by multinationals.  "The corporate accountability movement, however, is far too significant to be sidetracked by this one decision, especially now that ATS has inspired many foreign analogues and other legal theories under which corporations can be are are being sued at home for their role in rights violations abroad," Chip Pitts, a law professor who teaches corporate accountability at Stanford university told CorpWatch. "Expect further developments in this arena globally."

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