Global Policy Forum

By Jeffrey Benner

Unocal Corp on Tuesday will ask a panel of US federal judges to overturn an earlier ruling in the same court that found the oil company should stand trial for aiding and abetting human rights abuses by the Myanmar government against villagers who built a natural gas pipeline. The case has been bogged down in seven years of procedural wrangling. But a ruling by a three-judge panel of the Ninth Circuit Court of Appeals in San Francisco last September found there was enough evidence against Unocal to merit a trial. Now the company is asking a broader panel of 11 judges in the same court to overturn the narrower panel's ruling.

Lawyers for the plaintiff's said they are confident the court will send Unocal to trial and see little chance it will adopt Unocal's position, supported by the US Department of Justice (DOJ), that it cannot be sued in the US for alleged abuses committed abroad by a foreign government. "There is no way that the Ninth Circuit is going to accept the DOJ's argument," said Richard Herz, co-counsel for the plaintiffs in the case. "It would overturn a number of their own rulings."

The case was first filed in 1996 on behalf of farmers from Myanmar, formerly Burma, who allege the Burmese military terrorized and raped them and used them as forced laborers to clear brush and build roads for a gas pipeline Unocal owns jointly with Myanmar's state-owned oil company and French oil firm Total, formerly TotalFinaElf. The case is being closely watched by businesses and human rights lawyers to see how the courts enforce laws against multinational corporations who do business in countries with poor human rights records. If the plaintiffs are successful, business groups predict it will lead companies like Unocal to curb foreign investment.

Unocal's case has become the front line in an increasingly heated battle pitting human rights lawyers against business groups and their allies in the Bush administration over the proper application of the Alien Tort Claims Act (ATCA), a 214-year-old law which is being used to sue more than a dozen corporations for abuses allegedly committed by governments they have taken as business partners. After intense lobbying from business groups, the US Department of Justice filed a "friend of the court" brief in the case asking the court to dramatically curtail application of the ATCA because it interferes with US foreign policy.

Short of appealing to the US Supreme Court, Tuesday's hearing before a rare "en banc" sitting of the full Ninth Circuit Court of Appeals is Unocal's last chance to overturn the ruling of a three-judge panel of the Ninth Circuit last September that found there was enough evidence against Unocal to merit trial.

Even supporters of Unocal's position were not optimistic the court, which is not expected to rule on the case for several months after Tuesday's hearing, would rule in Unocal's favor. The Ninth Circuit does not have a history of being particularly sympathetic on these things, said Bill Reinsch, president of the National Foreign Trade Council, which lobbies on foreign trade and investment issues on behalf of over 300 US corporations, including Unocal. Reinsch predicted that, if the case goes to trial, it will discourage foreign investment in poor countries like Burma that need it most. "The most likely short term effect will be companies will simply pull back from global engagement," Reinsch said.

But Terry Collingsworth, an attorney for the plaintiffs in the Unocal case, said this argument is an attempt to cloud the issue. "They're trying to create fear companies won't invest in places like Burma," he said. "But the only requirement here is that if you invest in Burma you make sure you are not involved in slavery."

Unocal spokesman Barry Lane said the company has no knowledge of the alleged atrocities, and that it is merely a passive investor in the project with no contractual relationship with the Myanmar's military.

"We are an investor," he said. "We didn't build the pipeline."

Lane compared taking Unocal to court for alleged action of the military to suing shareholders for actions of a company over which they have not direct control. He predicted that unless the court reversed course and curtails use of the ATCA, companies like Unocal will cut back their foreign investments. "The current interpretation of the ATCA is very dangerous and will have a chilling effect on investment by any company in any country," Lane said.

Errol Mendes, a law professor at the University of Ottowa, said in the end it's not important which way the court rules, because the real motive of human rights lawyers pushing ATCA cases is to bring the issues into what he called "the court of public opinion". "Even if the case is dismissed, it won't be over," he said. "It is amazing how much impact these sort of issues have in terms of choice of business partners, moral of employees, and raising capital." Mendes's recent book, "Global Governance, Economy and Law: Waiting for Justice," outlines the increasing importance of public opinion in corporate decision making.

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