Unocal Cannot Be Blamed for

Agence France-Presse
January 23, 2004
A California judge ruled that American oil giant Unocal cannot be held responsible for human rights abuses during the building of a disputed gas pipeline in Myanmar. In a landmark decision, Los Angeles Superior Court Judge Victoria Chaney ruled in favor of the company in a lawsuit which accused if complicity in rights abuses by Myanmar's military junta during the building of the pipeline in the 1990s. The lawsuit against California-based Unocal was brought on behalf of 15 villagers from Myanmar, the southeast Asian country formerly known as Burma, who accused the company of complicity in murder, rape and forced labor on the pipeline perpetrated by Yangon. The plaintiffs alleged the company turned a blind eye to abuses committed during the construction of the 1.2 billion-dollar, 62-kilometer (39-mile) Yadana pipeline that carries natural gas from Myanmar to neighbouring Thailand. Unocal was the first US company to go to trial in the United States in a civil suit alleging rights abuses. But the judge ruled that the firm could not be held responsible for the conduct of its wholly-owned subsidiaries which were directly involved in the Yadana project. Chaney said Unocal followed proper corporate governance in setting up subsidiaries involved in the pipeline. The first phase of what was to have been a complex two-part trial focused on whether Unocal could be held liable for the conduct of its subsidiaries which invested in the pipeline. But with Friday's ruling for the company, the second phase, to determine actual dollar claims against the energy giant, was made moot. Terry Collingsworth, a lawyer for the villagers, claimed in closing arguments on Wednesday that Unocal set up "corporate shells" simply to avoid liability for the enslavement of villagers when the pipeline was built. "Unocal made all the decisions," he said. "It was a business choice. It's not illegal to have done that, but the tradeoff is if you go the corporate-shell route, you don't get limited liability. "The subsidiaries had nothing to do with construction of the pipeline. They were simply paper conduits," he said. "They are tax shelters, they are cash pass-throughs, but they were not responsible for the pipeline." Unocal used as its defense California's "alter-ego doctrine," which bars plaintiffs from trying to tap a parent corporation if a subsidiary had valuable assets of its own.

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