Supreme Court Set to Decide Corporate Liability for Human Rights Violations

The Supreme Court is expected to decide within weeks whether it will hear a case on the liability of U.S. corporations for human rights violations in other countries.

The issue has simmered for years as human rights advocates accused corporations of abusing residents of mineral rich areas overseas to evade U.S. laws that never would allow the same kind of exploitation.

The dispute came to a head in recent lawsuits against oil companies Royal Dutch Shell PLC and Exxon Mobil Corp. for their oil exploration in Nigeria and Indonesia.

They are accused of trampling the health and livelihoods of native people and using soldiers to intimidate them.

The corporations say no U.S. law exists that could make them responsible for alleged human rights abuses in Nigeria and Indonesia.

They have been joined in opposing the lawsuit by the U.S. Chamber of Commerce, which submitted an amicus – or friend-of-the-court – brief that says international law “establishes liability for states and individuals, and not for corporations.”

The chances the Supreme Court will hear the case, entitled Kiobel v. Royal Dutch Shell, are heightened by the fact lower courts have split in deciding corporate liability. The Supreme Court normally steps into a case to clear up confusion among lower courts.

The U.S. Circuit Court of Appeals for the District of Columbia ruled in July that federal courts are authorized by U.S. law to determine whether corporations are liable for human rights violations abroad.

The ruling ran exactly opposite to a September 2010 decision by the 2nd U.S. Circuit Court of Appeals on the same issue.

Days after the decision in the District of Columbia, the 7th U.S. Circuit Court of Appeals in Chicago agreed corporations could be liable in U.S. federal courts.

The Chicago court ruled on a lawsuit against Firestone Natural Rubber Co. for its conduct in Liberia. The court concluded the accusations against the company lacked merit.

The lawsuits are based largely on the U.S. Alien Tort Statute, a 1789 law that allows foreign citizens to sue Americans for violating international laws and treaties.

The law was rarely used until a 1997 lawsuit by 13 Burmese villagers against California energy company Unocal. It accused the company of using forced labor to build an oil pipeline.

An appellate court in San Francisco allowed the lawsuit, forcing the parties to settle.

Royal Dutch Shell is accused under the law of suppressing Nigeria’s Ogoni people.

About a half-million Ogoni live in the Rivers State region of Nigeria, where they make their living largely as fishermen and farmers. Their lifestyles became threatened when Shell discovered oil there in 1958.

Environmental hazards that followed included oil spills that damaged the soil and gas flares that polluted the air, causing acid rain and respiratory problems.

A 1998 United Nations report accused the Nigerian government and Shell of human rights violations against the Ogoni for the environmental disaster.

Exxon Mobil is accused of hiring Indonesian soldiers to guard the company’s Arun natural gas field.

Eleven villagers say Exxon Mobil knew the Indonesian military had committed genocide in the region where the natural gas field is located. They say the military had murdered, tortured and raped residents.

The corporations say they might have to shut down their overseas operations under a flood of litigation if they can be sued for human rights violations. The money damages they would need to pay could be enormous, according to their lawyers.

One of their briefs says about 150 lawsuits have been filed against corporations in the past 20 years accusing them of human rights violations in 60 countries.

Courts that have ruled the corporations could be sued largely followed the reasoning of Judge Pierre Leval, who dissented in the 2010 Chicago court ruling in favor of the corporations.

The ruling protecting the corporations shows that “one who earns profits by commercial exploitation of abuse of fundamental human rights can successfully shield those profits from victims’ claims for compensation simply by taking the precaution of conducting the heinous operation in the corporate form,” Leval wrote.