Uncertain justice: liability of multinationals under the Alien Tort Claims Act.

Author:Shaw, Courtney


On August 31, 2000, a federal district court judge in California handed down a decision that disposed of a potentially groundbreaking human rights case. (1) In Doe v. Unocal Corp., (2) Judge Ronald S.W. Lew granted defendant Unocal's motion for summary judgment, (3) thereby dismissing claims brought by fifteen Burmese villagers (4) under the Alien Tort Claims Act, 28 U.S.C. [section] 1350 (ATCA). (5) The plaintiffs sought to hold the defendant, a California-based energy company, liable for human rights violations committed by the Burmese military in furtherance of defendant's pipeline venture. An earlier version of the case, National Coalition Government of the Union of Burma v. Unocal, (6) had held that allegations that Unocal "may have been a willing participant" in the Burmese military action would permit the federal district court to exercise subject matter jurisdiction. (7) However, the decision in Unocal V held that the evidence was insufficient to survive a summary judgment motion. Although the litigation was dismissed, the issues raised by the case remain pertinent and unresolved. (8) When an energy company undertakes ventures abroad, is it liable in United States federal court for human rights violations committed in connection with its operations in those foreign countries? (9)

This issue is important to multinational companies, and to energy companies in particular. Multinational energy companies are among the largest companies in the world. Their ventures around the globe tend to expose them to a wide variety of societal conditions, including many human rights and environmental problems. (10) Additionally, energy companies face a unique set of circumstances in performing their work. First, the resources they are seeking are often found in less-developed countries. For the governments of such countries, these resources are often a primary supply of income. (11) Second, resource extraction work usually involves constructing complicated infrastructure at the site and utilizes a good deal of hard labor. (12) As a result, energy companies often confront particularly grave human rights conditions. Finally, many energy companies engage in a practice that has been termed "militarized commerce," meaning that they rely on the military forces of their host country to provide security for their projects. (13) Certainly when companies engage foreign military or paramilitary forces in this fashion, they run the risk of fending off lawsuits for any human rights abuses committed by those forces in conjunction with the projects.

A proliferation of recent litigation demonstrates that extraterritorial liability under the ATCA has become a serious issue for the operation of multinational energy companies. The Unocal litigation in the Ninth-Circuit is but one example of this trend. For example, in the late 1990s, two cases in the Second Circuit dealt with multinational oil companies being sued by foreign plaintiffs under the ATCA for violation of international law. (14) One case, which was ultimately dismissed on forum non conveniens grounds, involved environmental claims against Texaco for its operations in Ecuador. (15) The second case, which was also dismissed on forum non conveniens, involved human rights claims against Shell in Nigeria. (16) More recently, a lawsuit has been filed in the District of Columbia against Exxon Mobil for alleged human rights abuses committed by the Indonesian military, which the company had used as security in its natural gas projects in that country. (17) Although none of these ATCA cases has yet resulted in a successful judgment for the plaintiffs, they represent a trend with which multinational oil companies must contend.

One problem in determining whether a company might potentially be liable for its actions abroad is that there is no federal statute that squarely addresses the answer to this question. (18) Commentators and lawyers alike have called for statutory codification of guidelines to aid American multinational oil companies in making decisions in this regard. (19) For example, one lawyer stated:

So, why am I troubled by the Unocal doctrine? That's the problem--it should not be a judicial doctrine, it should be a statute. As a doctrine, it's much easier to applaud than to apply. It strikes a blow for human rights against an alleged violator, but it offers virtually no guidance to companies that want to avoid a violation. All the doctrine does is warn companies very generally that they should not knowingly benefit from a governmental business partner's violations of human rights. (21) In the absence of such legislation, however, the only guidelines that energy companies can utilize are a patchwork of doctrines developed in the recent cases dealing with the subject.

This Note examines the most important of those doctrines: a responsibility standard articulated by Judge Lew in the Unocal V decision. This standard, which essentially attempts to define when a company may be held responsible for the bad acts of foreign governments, determines whether subject matter jurisdiction will lie under the ATCA. In this regard, Part I of this Note explores the legal foundations of the Unocal case--the history of the ATCA and issues encountered in its early use in human rights litigation. Specifically, these issues are the problems of establishing the ATCA as a substantive right of action, determining that private actors are liable under the ATCA in some circumstances, and defining the boundaries of the class of violations that the ATCA covers. In Part II, this Note reviews the circumstances of the Unocal case itself and details the actual standard for responsibility laid out in the Unocal V case, a standard that is premised on imputing color of state law on private actors through a joint action test developed in American civil rights jurisprudence. In Part III, this Note describes several possible alternatives to the responsibility standard articulated in Unocal V, some of which could be more problematic for multinational energy companies. First, it explores other possible interpretations of the joint action test. Second, it explores other tests in civil rights jurisprudence for imputing color of law on private actors. After finding that applying any of the civil rights doctrine may not be appropriate, it finally explores several alternative standards of liability: state responsibility, joint liability for a tort, and accomplice liability. This Note concludes that the last two alternatives may be more appropriate than the Unocal standard, but that substantial uncertainty for multinational oil companies remains, since the standard has yet to be addressed on appellate review or by a statute.


    1. Early History

      The Alien Tort Claims Act, 28 U.S.C. [section] 1350, was part of the Judiciary Act of 1789. (22) The original statute said: "[The district courts] shall also have cognizance, concurrent with the courts of the several States, or the circuit courts, as the case may be, of all causes where an alien sues for a tort only in violation of the law of nations or a treaty of the United States." (23) It has been modified three times subsequently (24) and now reads: "The District Courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States."

      Several reasons have been posited as to the original purpose of the ATCA. One view is that it was primarily a response to national security concerns--its drafters were concerned about the consequences of denying a judicial forum to foreigners. (25) Another theory is that the drafters did not want to discourage settlement and investment in the United States by foreigners, and felt that declining to provide a judicial forum would have such a negative effect. (26) A third idea is that the ATCA's chief purpose was to provide a judicial forum to foreign ambassadors in America. (27) One final theory is that it was intended to be a "badge of honor" (28) for the young United States, indicating that the country was ready to shoulder a perceived national duty to enforce international law as it related to individual conduct. (29) Although it is improbable that the clear rationale of the statute's original drafters can be discerned, it is generally thought that the statute now covers a more broad range of violations of the law of nations than those recognized at the time of its enactment. (30) Now it creates a forum available to aliens in any situation in which the United States has a duty to hear claims under international law. (31)

      Although some claims were brought under the ATCA at the beginning of nationhood, the statute traditionally was overlooked and was not considered an especially important piece of legislation. (32) Indeed, the statute was invoked successfully only five times in its first 200 years, making it a rather ineffective source of relief. (33) Judge Henry Friendly described the ATCA as "a kind of legal Lohengrin; although it has been with us since the first Judiciary Act ... no one seems to know whence it came." (34) The ATCA was resuscitated as a tool for human rights litigation in 1980 with the Second Circuit's decision in Filartiga v. Pena-Irala, where the court held that the ATCA authorized liability for torture committed under color of state authority. (35) In 1995, it gained further attention in another Second Circuit decision, Kadic v. Karadzic, which expanded the statute's reach to private actors in some circumstances. (36)

    2. Mere Jurisdiction or a Substantive Right of Action?

      One important issue that has been raised in past ATCA litigation is `whether the statute actually creates a substantive cause of action. The statute could be read as simply a grant of subject matter jurisdiction to the kinds of cases it covers. (37) Several recent cases, however, have interpreted the statute more...

To continue reading