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Multinationals facing legal piracy challenge

THE military dictatorship holds down oil-producing areas such as Ogoni by military decrees and the threat or actual use of physical violence so that Shell can wage its ecological war without hindrance.&rdquo; So read Ken Saro-Wiwa&rsquo;s closing statement at his trial before he and eight other leaders of the Ogoni people were hanged by the Nigerian military regime in November 1995.<br /><br />This week, Royal Dutch Shell settled the case alleging its involvement with the Nigerian military. The oil giant has always contested that the allegations were false, but agreed to pay &pound;9.7m to compensate the claimants and to establish a trust for the benefit of the Ogoni people. <br /><br />The settlement came a week after the start of a trial in New York charging Shell&rsquo;s Nigerian subsidiary with human rights abuses culminating in the execution of the Ogoni Nine. Judith Brown Chomsky, an attorney with the Center for Constitutional Rights, paid tribute to the bravery of the claimants saying their persistence &ldquo;helped establish a principle that goes beyond Shell and Nigeria &ndash; that corporations no matter how powerful will be held to universal human rights standards&rdquo;.<br /><br />The action is being brought under an arcane 18th century American statute called the Alien Tort Statute &ndash; originally intended to prosecute pirates &ndash; whereby non-US citizens are given the right to bring legal actions in American courts for international human rights violations. It&rsquo;s the same legislation that is enabling the victims of South Africa&rsquo;s apartheid regime to bring their legal fight to seek compensation from some of the world&rsquo;s largest companies via the US legal system. The New York courts gave the Khulumani support group permission last year to proceed with a lawsuit for damages against 23 multinationals.<br /><br /><strong>ANXIETY</strong><br />The rediscovery of a 220-year old statute, which lay largely dormant until the 1980s, is a testament to the inventiveness of American claimant lawyers and has caused businesses around the world considerable anxiety. So, it&rsquo;s here to stay? &ldquo;It&rsquo;s not going to be easily passed over by any Congress or president,&rdquo; says Daniel Lucich, a Washington lawyer specialising in trade policy who served as a treasury official in the Clinton administration. <br /><br />Human rights lawyer Martyn Day, senior partner at the London firm Leigh Day &amp; Co, has called the 1789 Act &ldquo;the most progressive and pro-human rights law on the US statute books&rdquo;. But the lawyer, who unsuccessfully attempted to sue the makers of arthritis drug Vioxx in the US on behalf of UK patients alleging strokes and heart attacks, says: &ldquo;Traditionally the American courts have shown very little enthusiasm for foreigners going to the US.&rdquo; <br /><br />Daniel Lucich argues that the &ldquo;vagueness&rdquo; of the legislation helps neither the business community nor those allegProxy-Connection:keep-aliveCache-Control:max-age=0g abuses. It &ldquo;says nothing about what violations it covers. So, just as there is uncertainty for corporations, the victims of human rights abuses don&rsquo;t know what they have suffered is going to be found to be a violation either.&rdquo; What does the legislation provide for? &ldquo;The Alien Tort Statute is a jurisdictional statute,&rdquo; explains Joe Cyr, who heads up the City firm Lovells&rsquo; US litigation practice. The legislation &ldquo;merely provides the Federal Court with jurisdiction over tort claims brought by aliens for violations of international law.&rdquo; In 2004, the Supreme Court imposed curbs on its scope in the case of Sosa v Alvarez-Machain limiting claims to major violations of international norms like piracy, torture and slavery. <br /><br /><strong>PUBLIC SCRUTINY</strong><br />&ldquo;There has never been a case under international law of a company being held liable. Not one,&rdquo; Cyr points out. So far claimants bringing actions have &ldquo;essentially done it to bring public scrutiny to what&rsquo;s been going,&rdquo; notes Lucich. <br /><br />But there have been significant settlements &ndash; not least Shell. Joe Cyr has advised a number of multinational companies as to their liability under the legislation including financial institutions as to their exposure in the South African litigation. Earlier in the year a New York federal judge ruled that apartheid-era victims could sue the likes of General Motors, IBM, Daimler and others for knowingly selling their vehicles and computer technology to a racist regime, but not the likes of Barclays and UBS.<br /><br />Even if corporations can be liable under the legislation, which Cyr takes issue with, he wants to know &ldquo;under what circumstances can they be found to be aiding and abetting foreign sovereigns?&rdquo; Shell was being sued because it allegedly aided and abetted the Nigerian government, he argues. But the lawyer asks: &ldquo;What does that mean? Under American criminal law, and under the criminal law of many jurisdictions, if someone is alleged to have engaged in a crime through complicit behaviour then it&rsquo;s necessary to demonstrate that they intended to facilitate the primary wrongdoing.&rdquo; <br /><br />Vyr reckons that the claimant lawyers are arguing for a lower standard of proof for alien tort claims than would be acceptable in the criminal courts. &ldquo;You can see from the perspective of a multinational that this is frightening,&rdquo; comments Cyr. &ldquo;You never know whether you are going to be caught unawares in some kind of litigation.&rdquo;<br /><br />Daniel Lucich points out that the reluctance of the courts to rule against such claims has been significant. &ldquo;It shows that judges don&rsquo;t want to throw out the victims of human rights abuses if they are not somehow going to be able to pursue their claims anywhere else in the world.&rdquo;<br /><br />But the lawyer adds: &ldquo;Almost everyone agrees the businesses aren&rsquo;t looking to go out and violate human rights. So there&rsquo;s a real interest in having certainty here.&rdquo; He argues for the G7 or the Organisation for Economic Cooperation and Development (OECD) to support an &ldquo;overriding convention which each country implements into its own law&rdquo;. He suggests as a model the anti-bribery convention backed by the OECD and so far adopted by 38 countries. &ldquo;It doesn&rsquo;t make any sense that the US is the country of first resort for all of these trials,&amp;rdq