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Supreme Court May Consider Whether Companies Can Be Sued Over Human Rights


Published: August 11, 2011

Recent court rulings on the question of whether oil companies and other multinationals can be sued in U.S. courts for alleged human rights violations overseas has made the issue ripe for Supreme Court intervention, possibly as early as this fall.

Oil companies Royal Dutch Shell PLC and Exxon Mobil Corp. have been battling allegations that they played a role in human rights abuses in Nigeria and Indonesia, respectively.

Shell won a major victory last year when the New York-based 2nd U.S. Circuit Court of Appeals ruled in Kiobel v. Royal Dutch Shell that there was no corporate liability under the statute.

The Nigerian plaintiffs in that case have now filed a petition (pdf) with the Supreme Court. The justices will likely consider whether to take the case sometime after they return in October from their lengthy summer recess.

Although it is notoriously tough to predict whether the high court will take a case, the chances appear reasonably high in large part because there is a split within the federal appeals court on the issue.

There is also the possibility that the court could pass on Kiobel but then take up one of the other cases at a later date.

“Although it’s not clear which of the individual cases the court will review, it seems to be virtually certain that the justices will take up this question within the next two terms,” said Supreme Court expert Tom Goldstein of the Goldstein, Howe & Russell law firm.

The lawsuit against Exxon Mobil over human rights allegations in Indonesia is one of the other prime candidates for Supreme Court review.

In July, the U.S. Circuit Court of Appeals for the District of Columbia reached the opposite conclusion to the 2nd Circuit when it ruled in Doe v. Exxon Mobil that the lawsuit could proceed in federal court (E&ENews PM, July 8).

Exxon asked this week for the full court to rehear the case en banc. If that request is granted, it would delay any possible Supreme Court involvement.

Just days after the D.C. Circuit ruling, the 7th U.S. Circuit Court of Appeals in Chicago also ruled that companies could be held liable, although the court ultimately concluded in that case that claims against Firestone Natural Rubber Co. over its conduct in Liberia did not have any merit.

Other cases on the same legal issue are still working their way through the courts, including Sarei v. Rio Tinto. That case is currently pending before the San Francisco-based 9th U.S. Circuit Court of Appeals, which agreed to rehear the case en banc.

The case relates to allegations against mining giant Rio Tinto over its operations on an island off the coast of Papua New Guinea.

Human rights lawyers point out that so far the split in the circuit is 3-1 in favor of companies having liability, if several rulings in the Atlanta-based 11th U.S. Circuit Court of Appeals in recent years are included in the analysis.

“It’s possible that there’s one outlier, and that’s Kiobel,” said Marco Simons, an attorney at Earthrights International, which has intervened in some of the cases in support of the plaintiffs.

Although Simons would not be surprised if the Supreme Court took the case, he noted that the justices may want to wait until there are more rulings indicating a broad split among circuits.

“The Supreme Court typically doesn’t take cases unless there’s a circuit split where the issue is still being bounced around,” he said.

Attorneys for the corporate defendants dispute whether the 11th Circuit has really tackled the question head-on. They also have high hopes that the D.C. Circuit will reverse itself after the en banc rehearing.

The companies have the backing of the U.S. Chamber of Commerce, which has intervened in a number of the cases.

A spokesman declined to comment, but pointed to an amicus brief filed before the 7th Circuit in which the Chamber’s lawyers outlined the organization’s position.

The brief states that, in the past 20 years, there have been 150 lawsuits filed against corporations over their activities in about 60 countries.

According to the U.S. Chamber’s lawyers, to conclude that corporations are liable under the statute is a misreading of international law, which “establishes liability for states and individuals, and not for corporations.”

Click here (pdf) to read the Kiobel petition.

Copyright 2011 E&E Publishing. All Rights Reserved.

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