The US alien tort ruling is a blow for campaigners, but other laws may take its place, says Peter Davis, politics editor

For the past 15 years or so, arguably the most powerful tool in the anti-corporate campaigners' armoury has been the US Alien Tort Claims Act (ATCA).

Dating back to 1789, this ancient piece of legislation allows US courts to hear death and injury claims by non-US citizens resulting from alleged violations of international law, including war crimes and crimes against humanity.

This act has been used to great effect over the past few years against a range of companies, but its continued use in this way is threatened by a recent ruling in the US courts.

In September, the second circuit courts in the US – those covering New York and a couple of neighbouring states – dismissed a class action brought by Esther Kiobel. She is the widow of one of the Ogoni campaigners executed in 1995, of which the most famous was Nigerian playwright Ken Saro-Wiwa. The court dismissed the case on the grounds that companies are not liable under this act. This ruling has caused outcry amongst campaigners and anti-corporate activists.

Significant impact

ATCA dates back to 1789 and was originally designed to combat piracy by allowing those whose ships had been attacked by pirates off the US eastern seaboard to pursue a case against them in the American courts against the pirates’ US assets.

Activists realised in the late 1990s that this act could be used in a modern day setting against alleged corporate abuses.

Since then, about 60 companies have been on the receiving end of ATCA suits. Kiobel and the other plaintiffs in the second circuit case had alleged that oil major Shell, acting through a Nigerian subsidiary, aided and abetted the Nigerian dictatorship’s violent suppression of protests against oil exploration and development activities in the Niger delta.

However, many other companies have been subject to similar actions. Talisman Energy was targetted in 2000 over its activities in Sudan; FreePort McMoRan came under fire for alleged human rights abuses in Indonesia; and Caterpillar was criticised for its sale to Israel of bulldozers used against Palestinian settlements.

Although no company has lost a case, the impact of ATCA writs has been significant, both for the individual companies targetted and for the corporate sector collectively. For individual companies, the sheer management time and effort required to defend these cases can be dislocating, and for individual managers the effect could be highly problematic. This author was once speaking at an event where a fellow speaker was a representative from a company targetted under ATCA. This executive went nowhere without a group of minders designed to prevent anyone serving a writ on him.

Collectively, the impact of these suits for companies was to bring into sharp focus the need to manage better their activities in countries such as Nigeria, China and Sudan. Improvements in corporate behaviour on human rights and other such issues over the past decade or so is not solely down to ATCA, but the act has played an important role.

Where next?

The September ruling argued that corporations cannot be held liable under the act for breaches of international law abroad. The decision was a majority one, with one of the three judges opposing it.

The dissenting judge argued that it was illogical for individuals still to be liable under ATCA, but not companies. He argued that it was “absurd to allow individuals to escape civil liability for slave-trading or piracy as long as they are incorporated”.

So far the ruling only affects the second circuit court region, and the decision is very likely to be appealed to the US supreme court. In early October, the supreme court declined to rule immediately on the specific question of whether corporations could be held liable under international law, so we will have to await the outcome of any appeal in the Kiobel case.

In the absence of any overarching international regulation on business and human rights, ATCA has proven an invaluable tool in providing at least some legal process for examining examples of alleged corporate abuse. There is no doubt that its demise would be a matter of great regret.

However, since ATCA was first used the world has moved on. For example, the new US finance act requires companies to report on conflict materials from the Democratic Republic of the Congo in their products. And UN special representative John Ruggie is about to bring forward his recommendations on managing corporate impacts on human rights.

Although there is still no global legal framework to govern corporate human rights impacts (nor likely to be), the US legislation and Ruggie’s work demonstrate that there is a great deal more focus on the impacts of companies in developing countries than was the case in the late 1990s.

Some companies may welcome the demise of ATCA, but other, newer and possibly more comprehensive legal processes seem likely to take its place.

Please note that the above is a revised and updated version of this column.