Non-Citizens Sue American Businesses Under 1789 Law

By Robert B. Bluey | July 7, 2008 | 8:21 PM EDT

Washington ( - A little-known provision adopted by Congress more than two centuries ago is causing havoc for American companies doing business in other countries, according to free-market advocates who gathered at the U.S. Chamber of Commerce Wednesday.

The Alien Tort Claims Act was rarely used before a 1980 federal appeals court decision sparked interest in the statute. At least two dozen cases are now pending across the United States.

At issue in many of the lawsuits is whether a statute adopted by Congress as part of the Judiciary Act of 1789 gives non-residents the right to sue American companies in U.S. courts for human rights violations in other countries.

Supporters of the act, known as the ATCA, claim that without it, there would be no way to hold American companies responsible for their actions overseas. But the conservative lawyers at Wednesday's gathering say it gives non-residents more rights than American citizens.

A case involving California oil company Unocal, which is currently being heard by the U.S. Court of Appeals for the 9th Circuit, has drawn international attention to the issue. The U.S. Department of Justice even took the unusual step of filing a brief while it is at the appeals level.

The dispute centers on alleged human rights violations committed during construction of a gas pipeline in Burma. While Unocal hasn't been accused of any firsthand offenses, the Burmese citizens who are plaintiffs claim the company should be held liable because it had a business partnership in the deal.

In many respects, the case is a model example of the types of charges brought under the ATCA. Bill Reinsch, president of the National Foreign Trade Council, said judges are sympathetic to the plaintiffs since the human rights violations are often gruesome and egregious.

"Simply put, these cases are an attempt to hold companies liable for the actions of other people in other countries," Reinsch said. "It is a classic example of vicarious liability. In our view, this causes a lot of damage on both ends of the investment."

That investment, Reinsch explained, involves both economics and foreign policy. Some countries - South Africa in particular - have come out strongly against lawsuits stemming from actions in their nations. American businesses, meanwhile, face mounting litigation costs and damage to their reputations, he said.

Besides Unocal, other large U.S. companies have been the targets of these suits, including Texaco, Union Carbide, Coca-Cola, Chevron, United Technologies, Exxon Mobil and Ford Motor Co., among many others.

The U.S. Chamber of Commerce joined other business and free-market organizations in filing a friend-of-the-court brief asking the 9th Circuit to clarify the ATCA. But conservatives openly expressed their worries that the liberal-leaning court might side with environmentalists and labor groups in the dispute.

Former judge Robert H. Bork, now a senior fellow at the American Enterprise Institute, said the time has come for the Supreme Court to step in and set the record straight.

Bork, who last week harshly criticized the ATCA in a Wall Street Journal column, was part of a three-judge panel on the U.S. Court of Appeals for the District of Columbia Circuit in 1984 that rejected a claim under the act involving Israel and the Palestinian Liberation Organization.

He said there was no way that Congress in 1789 would have intended the law to be used by non-citizens as a means to hold U.S. companies liable for human rights violations they may or may not have been responsible for in a foreign country.

Instead, Bork said, the reasons for adopting the law more than likely had to do with piracy on the high seas and a need to protect foreign diplomats.

"Had they had anything in mind like the modern expansionist view," he said, "there surely would have been an extensive legislative history because it would have been a controversial statute."

But supporters of the ATCA, including environmental and labor groups, claim Bork and other conservative legal scholars are exaggerating the issue.

"Big business in America wants to immunize itself from these kinds of lawsuits," said Kenny Bruno, campaigns coordinator for EarthRights International.

He said the two dozen pending cases show that the act isn't being abused, given the amount of litigation filed in federal courts every day. He added that judges have the option to throw out unreasonable claims.

"This is not a serious threat to business overall," Bruno said. "It is a threat to businesses that have no conscience how they behave overseas."

The Unocal case has groups like EarthRights International and the International Labor Rights Fund, as well as the conservative Federalist Society and the Competitive Enterprise Institute, anxious to see how the court decides.

Meanwhile, on the international scene, one of the countries with a statute similar to the United States plans to change its law. Belgium announced that its law would undergo a revision after being heavily criticized for considering war crimes charges against Gen. Tommy Franks, leader of U.S. operations in Iraq.

In Washington, it might be more difficult to get members of Congress on board for such a plan. That's one reason Bork said the Supreme Court would be wise to settle the issue once and for all.

See Related Story:
Belgium to Change War Crimes Law After US Threats (June 23, 2003)

Listen to audio for this story.

E-mail a news tip to Robert B. Bluey.

Send a Letter to the Editor about this article.