Exxon ruling reinstates corporate liability case

The US Alien Tort Act appears to have been resurrected after its apparent death last year.

A potentially landmark decision in July could open up new avenues for complaints and compel reconsideration of previous cases.

The 200-year-old Act looked defunct as a means of holding multinationals to account for their overseas human rights violations after a New York court ruled late last year that the legislation could only be used to prosecute ‘natural persons’, not corporations (EP12, issue 6, p1).

However, the much-debated issue of the law’s application took another turn as a three-strong panel of District of Columbia judges, on a vote of 2-1, rejected that ruling, which directly concerned Shell’s involvement in murder and torture in 1990s Nigeria.

The judges said that, contrary to a ruling on another alien tort case brought against Talisman in 2009, it is enough to establish liability if a company acts ‘knowingly’, and not necessarily ‘purposefully’, in violating human rights.

The case concerns a complaint brought against Exxon by villagers in the Aceh province of Indonesia, who allege that the company’s security forces committed murder, torture and sexual assault in the early years of the last decade. The ruling looks likely to force the previously dismissed Shell case to be reopened and create a precedent for future cases.

Michael Torrance, a lawyer at Norton Rose, told EP: “The recent decisions open the door for corporate liability in relation to global human rights practices under the Alien Tort Claims Act, and challenges the notion that companies could never be held responsible for human rights violations abroad.”

This shift, he said, chimes with the efforts of John Ruggie, the former United Nations special representative on human rights and transnational corporations, to consolidate customary law, an important pillar of international law, on the human rights practices of business.

Torrance said the reasoning of the Exxon ruling, which had applied to the dismantling of Nazi-supporting corporations after the Second World War, “is consistent with the general trend in international law embodied by the Ruggie report, which was recently adopted by the UN Human Rights Commission”.

He said: “The report codifies customary international law requiring corporations and their agents to respect human rights and avoid direct involvement or complicity in violations.”

Around 60 corporate cases for ethical misdemeanours outside US territory have been brought under the Act. Results have been mixed: partial defeats for companies, out-of-court settlements and the occasional victory for prosecutors.