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Chevron Case Weighs Extent of Overseas Liability

THE WALL STREET JOURNAL

DECEMBER 1, 2008

By RUSSELL GOLD

A bloody protest by Nigerian villagers against Chevron Corp. in 1998 has led to a closely watched federal lawsuit that could have a far-reaching impact on how multinational companies conduct business overseas.

The jury in the civil trial, which has been under way in San Francisco for the past five weeks, began deliberating its verdict Tuesday. Its conclusion could strengthen an evolving legal frontier: Can multinational companies be hauled into U.S. courts and held accountable for alleged human-rights violations that occur on its properties overseas?

Chevron Case Weighs Overseas Liability

Associated Press: Larry Bowoto, right, is one of several Nigerians suing Chevron in the U.S. over a 1998 incident at an oil facility off Nigeria’s shore that resulted in two deaths.The case centers on a 1998 protest involving about 100 Ilaje villagers from coastal Nigeria, who occupied an offshore oil facility owned by Chevron. After the villagers stayed for three days, Chevron called in the Nigerian military to remove them. The response was bloody: two protesters were shot and killed. Others were taken into custody and allegedly tortured, according to court filings.

The lawsuit, Bowoto v. Chevron, was brought by the protesters and their family, including Larry Bowoto, who was injured by the military. It is drawing broad attention in corporate executive suites in part because it is a major test of the Alien Tort Claims Act against a major corporation. It is also the first time the courts have tested whether a corporation can be held responsible for the actions of local authorities it calls in for protection.

“This is the first corporate alien tort trial where you have a very common set of facts — reliance on the government for security — that is creating potential liability,” says Jonathan C. Drimmer, a partner with the law firm Steptoe & Johnson. A jury verdict against Chevron, he says, “will make life a lot more difficult for companies operating abroad.”

Lawyers and spokesmen from both parties either didn’t return calls or declined to comment, citing an order by U.S. District Judge Susan Illston to prevent them from discussing the ongoing case. In previous statements, Chevron has said any claim that it “intended for the Nigerian law enforcement personnel to harm anyone is beyond far-fetched.”

The Alien Tort Claims Act is a legal statute that dates to 1789, when Congress enacted the law to ensure the newborn nation would abide by international laws. It allows foreigners — or aliens — to bring suit in U.S. courts charging violations of international laws. The law sat largely unused until recent years, when lawyers began to use it as a tool to seek justice in U.S. courts for people who claim to be mistreated overseas.

Only once before the Chevron case has a U.S. jury faced an Alien Tort Claims case involving a corporation. In 2007, Drummond Co., an Alabama mining company, was alleged to have supported Colombian paramilitary groups that killed three union activists. The jury found there was insufficient evidence to hold the company responsible for the killings. Drummond, as previously reported, has denied any role in the deaths of the union leaders.

The suit against Chevron raises a set of tough issues for oil companies with large capital investments overseas. In Nigeria and many other countries, multinational corporations aren’t allowed to maintain their own security forces and must rely on the military for protection, says Sebastian Spio-Garbrah, an analyst with political-risk consultant Eurasia Group. U.S. companies, including Chevron, routinely pay the Nigerian military for its services, and house and feed troops, according to court filings.

Early next year, Royal Dutch Shell PLC faces a similar case in New York federal court stemming from the 1995 death of Ken Saro-Wiwa, an activist in oil-rich coastal Nigeria critical of the oil industry’s environmental impacts. Shell has denied to an oil-industry publication that it was complicit and called the allegation “false and without merit.”

“Corporations are watching to see if a U.S. jury is willing to award damages in a situation where a corporation is indirectly responsible,” says Chimene Keitner, an associate law professor at the University of California Hastings College of the Law who has attended several days of testimony in the Chevron case.

Some of the details of what happened on the Chevron oil facility remain in dispute. According to court files, both sides agree that on May 25, 1998, about 100 unarmed protesters boated out to an offshore platform and an attached barge owned by Chevron and boarded it as a protest.

The villagers and their lawyers say it was a peaceful protest and that over the next three days, Chevron workers and the protesters “played games, shared meals, watched videos, fished [and] chatted together,” according to a court filing. Chevron said the protesters threatened to burn the barge and the workers were being held hostage. On May 28, Chevron asked the Nigerian military to help end the protest and provided company-leased helicopters for the operation.

The villagers said the military shot at them without provocation, killing two protesters. Chevron said in court filings that the two villagers killed had metal pipes “raised above their heads in a threatening manner.” After the military secured the offshore facility, villagers said 11 protesters were locked in a cargo container and beaten.

Write to Russell Gold at [email protected]

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