A Big Win for Human Rights
Unocal's settlement with Burmese
villagers may spur better corporate conduct
by Daphne Eviatar
The Nation magazine, May 9, 2005
Early in April, the California-based Unocal
Corporation announced it was being bought out by its neighbor,
the oil giant ChevronTexaco. Splashed across the business pages,
the news overshadowed another announcement, made much more quietly
two weeks earlier: that Unocal had agreed to pay to settle a long-running
lawsuit charging the oil company with assisting and encouraging
the torture, murder and rape of Burmese villagers by government
soldiers so that Unocal could build a gas pipeline. The timing
of these two announcements is no coincidence, and it underscores
just how seriously these legal cases are now being taken in corporate
boardrooms. Once considered mere nuisances, lawsuits implicating
corporations in international human rights abuses have become
major obstacles to corporate profitability and prospects. I "Companies
like Unocal have been claiming all along that these cases are
not to be taken seriously, that they're just brought by a bunch
of activists for political reasons without legal grounds, and
that no one's had to pay for them and no one ever will,"
says Katie Redford, a lawyer for EarthRights International, who
helped put the case together in 1996 on behalf of one of two groups
of Burmese refugees. (Most of the plaintiffs have fled the country
and remained anonymous since the case was filed, to protect them
from retaliation by the Burmese government; see also Eviatar,
"Profits at Gunpoint," June 30, 2003.) "Companies
have been able to mislead themselves and the public that human
rights concerns would not affect their bottom line. That's just
not the case anymore."
About two dozen cases have been filed
against major multinational corporations charging complicity with
foreign governments in extraordinary brutality ranging from executions
to rape and genocide, usually committed by a foreign military
contractually obligated to protect corporate operations. Although
about half have been dismissed, usually on procedural grounds,
another dozen are still pending. Defendants include some of the
largest and most profitable companies in the world: Royal Dutch/Shell,
Coca-Cola and ExxonMobil. The Burma case is the first of these
to be settled for money damages. Although as a condition of the
settlement the size of the payment is confidential, both sides
say that the fifteen Burmese villagers who brought the case-each
with a unique horror story-won significant monetary compensation.
They'll also get money to develop a program to improve the living
conditions, healthcare and education of the people who live in
the pipeline region, and to help protect them from future abuses.
"It's more money than these people will ever know what to
do with," says Redford, who just returned from Thailand,
where she was visiting the plaintiffs and took some of them shopping
for the first time in their lives. "Now they can buy food
when they're hungry or medicine when their kids are sick,"
says Redford. "No one can give them back what they lost,
but they wanted this to be a deterrent."
Unocal unwittingly revealed the seriousness
of the settlement when in March it boldly sued its insurance companies
for the costs of the case. "The allegations of forced labor,
murder, rape, torture, battery, forced relocation and detention
throughout the Myanmar litigation fall within the policies' 'personal
injuries coverage," Unocal said in the lawsuit. The insurance
companies-which together insured Unocal for up to $60 million
in damages-denied the company's claims. That Unocal sued both
its primary insurer and its re-insurers, which would only reimburse
claims beyond an initial loss of $15 million, makes clear that
Unocal's costs were significantly higher than that. Attorneys'
fees alone are estimated to have been at least $15 million.
But as important as the settlement is
the strong legal precedent the Unocal case has set. A series of
federal court rulings in California established that a corporation
that assists ,r encourages human rights violations by a foreign
government, in this case the Burmese military, can be held legally
responsible in a US court. "The standard disclaimers that
they've used: that it wasn't our president physically torturing
the villagers who worked on the pipeline, it was the government,
our joint venture partner, doing this-the Unocal case established
that they can't say that anymore," says Jennie Green, a lawyer
for the Center for Constitutional Rights who was one of a group
of lawyers representing the Burmese villagers.
For years, business groups lobbied hard
for repeal of the Alien tort Claims Act, the law that allowed
the suit. The Bush Administration has also taken an unusually
strong stand against these cases, intervening several times to
ask courts to dismiss them. In the Unocal case Attorney General
John Ashcroft filed a brief to the Court of Appeals for the Ninth
Circuit denouncing the villagers' attempt to sue under the alien
tort law and, in a sweeping argument that surprised even corporate
advocates, argued that every court that had allowed these claims
in the past twenty years had been wrong. The court rejected his
But in some ways, the case against Unocal
was easy. "This case was unusually well documented,"
says Harold Hongju Koh, dean of Yale Law School and an expert
on human rights law. "Not every case will have that."
Indeed, the evidence against the company was damning. Although
Unocal repeatedly denied that it knew the Burmese government was
using forced labor to clear the land it needed to build the corporation's
pipeline, documents revealed that Unocal's consultants had repeatedly
warned it of the military's abuses, at one point stating unequivocally
that "egregious human rights violations save occurred."
The State Department and the United Nations had also denounced
the brutality of the Burmese regime.
Experts say this case and the settlement
will have a broad impact on corporations and force them to consider
their conduct overseas. "It puts companies on notice that
their relationships with foreign governments, and in particular
with foreign militaries, can become the subject of judicial review
in the United States," says Elliot Schrage, a former senior
vice president of global affairs at the Gap who teaches business
strategy and law at Columbia and is a senior fellow at the Council
on Foreign Relations. Companies in the extractive industries-oil,
gas and mining-will probably be most affected, since they often
agree to have a foreign government's armed forces protect company
"Boards of directors are now on notice
that this is a governance issue, too," adds Schrage, who
believes the settlement was a prerequisite to ChevronTexaco's
merger with Unocal. ChevronTexaco itself is now being sued for
alleged complicity in a series of shootings and the destruction
of two villages by Nigerian military forces protecting its oil
operations in the Niger Delta; without a settlement, Unocal would
have doubled ChevronTexaco's potential liability for human rights
violations and compounded its public embarrassment. Schrage adds
that insurance companies will now also scrutinize more closely
clients who do business in countries with repressive governments
and abusive militaries. The costs of genocide and slavery insurance
could be pretty high.
Catherine Boggs, a partner at the international
law firm Baker & McKenzie who advises major oil and mining
companies on their overseas operations, agrees that the Unocal
case has had a real impact. "Companies will give greater
weight to this sort of political risk when they consider going
into some of these countries, and will be more careful about how
they do business with them."
The recognition that bad corporate conduct
overseas can be costly at home is resonating abroad as well. In
France, in 2002, Burmese victims sued officials of Total, Unocal's
partner in the Burma pipeline and the fourth-largest oil and gas
company in the world. And a case against Texaco charging massive
environmental contamination in Ecuador is now in trial there [see
Eyal Press, "Texaco on Trial," May 31, 1999]. "European
corporate lawyers are very worried about such lawsuits,"
says Menno Kamminga, an international law professor at Maastricht
University in the Netherlands, who advises corporations and human
rights organizations. "And NGOs definitely want to bring
But if the movement for legal accountability
is slowly going global, so is the pressure to find more oil. World
oil consumption is rising dramatically, as is the price per barrel.
With countries like China now competing against the major multinationals
for drilling rights, the multinationals are under ever greater
pressure to pump more oil, more quickly and more cheaply. Historically,
that's meant moving into some of the most unstable and politically
dicey resource-rich countries in the world.
Ultimately, experts say, only international
standards can get all- corporations operating overseas to follow
the same rules. To that end, the UN is now drafting a set of norms
designed to govern transnational companies. But US officials have
already indicated they won't support anything that's enforceable.
That leaves the standards to be set by the courts-and at the expense
of companies that continue to do big business with bad governments.
Daphne Eviatar, a Brooklyn-based writer,
is a 2005 Alicia Patterson Fellow She has written about international
law and development for The New York Times Magazine, The Nation
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