Jonathan Kaufman's blog

I was thrilled last Thursday afternoon to hear that the SEC has blocked the oil industry’s first move in its attempt to undermine new transparency requirements.  The American Petroleum Institute (API) and other industry representatives petitioned the SEC to stay new disclosure requirements until the court’s decide on their lawsuit to overturn the law, but the SEC denied the request in no uncertain terms.

We've written in previous posts about Section 1504 of the Dodd-Frank Act, which directs oil, gas, and mining companies to publish the payments they make to the governments of the countries where they operate.  The SEC issued regulations for Section 1504 in late August, requiring companies to publicly disclose their payments for every project in each country where they operate, with no exceptions.  API sued the SEC, complaining that the law would be costly to comply with and would harm covered oil companies’ ability to compete for business abroad.  They claimed that at least four countries prohibit disclosure and predicted that they might have to withdraw from those countries, incurring tremendous financial losses, rather than violate their laws. (ERI and others had previously refuted each of these claims.)   Oxfam America – represented by ERI and two law firms – is currently defending the rules against API’s challenge to ensure that they go into effect as planned.

API asked the SEC to stay the rules and postpone the compliance date until after the legal challenge is concluded – which could take anywhere from five months to two years.  ERI and its co-counsel forcefully opposed a suspension, but convincing the SEC was an uphill battle.  The Commission had granted industry a suspension in the Business Roundtable litigation – an earlier case in which industry successfully overturned business regulations – and seemed inclined to do the same for API.

An important chapter in the search for justice by survivors of a massacre in the Democratic Republic of Congo came to a disappointing end this week, when the Supreme Court of Canada rejected their appeal of a lower court’s dismissal of their claims against Anvil Mining.

In 2004, an estimated 100 civilians died when the Congolese army attacked the town of Kilwa, which served as the base of operations for Anvil Mining, a Canadian/Australian company.  The survivors alleged that Anvil employees transported the soldiers to Kilwa, paid them, and gave them logistical support, including driving them around Kilwa during the massacre.  A Superior Court judge in Québec initially gave the plaintiffs a green light to pursue their claims, but the decision was later overturned by the Québec Court of Appeals, which ruled that the case should instead proceed in Congo or Australia. (I analyzed this decision in a previous blog post.) 

The Supreme Court’s decision to turn aside the plaintiffs’ appeal means that the Canadian courts are closed to their claims.  This outcome is not exactly surprising; Canadian courts have been quite aggressive in their use of the forum non conveniens doctrine to rid themselves of international human rights cases.  It’s disappointing, though, because for a brief moment the Canadian judiciary appeared to be willing to exercise the authority it has to apply universal human rights standards to companies that benefit from doing business in Canada.

Does anything go in corporate litigation, or does the international human rights system impose some limitations on the arguments and objectives of lawyers and corporate defendants?  Professor John Ruggie asks this question in a recently posted thought piece, concluding that whatever the legal merits of their position in Kiobel, the dishonest tactics and dishonorable goals of Shell and its legal team risk destroying their reputation and dashing society’s expectations of ethical conduct.

Professor Ruggie’s point of departure is the body of work he produced as the former U.N. Special Representative for human rights and business.  Over six years, the Ruggie mandate commissioned several research reports on the legal and social aspects of corporate human rights obligations.  Most prominently, the Special Representative developed a widely accepted framework positing that companies have a responsibility to respect human rights, avoid infringing on the rights of others, and address those harms that they cause or contribute to.  Shell’s lawyer at the Supreme Court, Kathleen Sullivan, cited one of Ruggie’s reports as support for her contention that the United Nations has found that companies do not have human rights obligations.

The problem, as my colleague Rick noted Monday, is that Ruggie and his team never made this statement.  The misuse of his work disturbed the Special Representative so much that he submitted an amicus brief to the Supreme Court to correct the record: Ruggie’s team actually found that while international human rights treaties do not appear to apply directly to companies, there is a steadily expanding web of legal liability that holds corporations accountable for human rights abuses.  And Shell’s misleading statements don’t end there.  Professor Ruggie points out that Shell’s briefs fudge the truth on a number of matters, from the false suggestion that U.S. litigation against companies that abetted the crimes of the apartheid regime in South Africa caused international friction to a bizarre attempt to portray as a victim the oil company that was sued in the U.S. for supporting crimes against humanity in Sudan.

Shell has fired its latest round in the Kiobel case in an attempt to create immunity for itself and all other companies that abet grave violations of universally recognized human rights.  In a brief filed with the Supreme Court on Wednesday, the oil giant makes arguments that range from misleading to false to offensive, all with the aim of proving that in no circumstances may U.S. courts consider claims under the Alien Tort Statute (ATS) involving human rights abuses that took place abroad.  If Shell’s proposed rule had been law for the last twenty years, Holocaust survivors, victims of international terrorism, and persecuted religious groups would have found U.S. courts closed to their claims and would not have been able to obtain compensation and justice.

Even a brief skim reveals classic tactics employed by the company’s high-paid lawyers to draw attention from the absurdity of the position they are defending.  Most offensively, the company includes some assertions that demean human rights victims and the strategies they select in their struggle for justice.  For example, Shell points to a letter from South Africa protesting ATS litigation but ignores a subsequent letter from the South African Minister of Justice commending the ATS as a helpful part of the country’s recovery from apartheid. 

Later, Shell implies that an ATS lawsuit pushed Talisman – a Canadian company accused of assisting the Sudanese army to attack communities surrounding its operations – to withdraw from Sudan, only to be replaced by a Chinese company that was even more compliant with the government’s genocidal wishes.  Here, Shell suggests that it’s no problem for Western companies to actively assist in crimes against humanity and also ignores the much larger campaign including victims and investors alike that convinced Talisman it was better off doing business in locations other than what is now the volatile border between North and South Sudan.

Last month, the U.S. government weighed in on the side of Royal Dutch Petroleum/Shell in the Kiobel case, opposing everyday people who claim to have suffered when the oil giant’s pursuit of profits led it to collude with the Nigerian military government to commit human rights abuses.

The government’s brief, authored by the Justice Department, was offensive, deeply troubling, and legally deficient. It argued that the United States judicial system is not available to victims of human rights abuses in cases like this one, where a foreign company that is otherwise subject to our courts was complicit in atrocities abroad.  This argument flies in the face of decades of precedent and weakens the protections of a law that is over 200 years old.

Now we’re pushing back. A number of key signatures are conspicuously absent from the brief, indicating that there were internal struggles within the administration over the government’s position. Most notable was the lack of a signature from Harold Koh, the top lawyer in the State Department and a longtime human rights advocate. In fact, neither the State Department nor the Commerce Department signed the brief, despite having joined a previous Kiobel brief in support of the victims.

Why didn’t the government’s top foreign and trade policy officials sign this brief? Their absence is particularly glaring given that the brief relies almost solely on arguments about the effects of human rights claims on foreign affairs.

We want to know how this strange brief came to be, so we have submitted three Freedom of Information Act (FOIA) requests, asking for relevant communications regarding the decision-making surrounding the government’s Kiobel brief. If disclosed, this information will help reveal whether or not the business interests of Attorney General Eric Holder or Deputy Solicitor General Sri Srinivasan influenced the government’s position in Kiobel.  Prior to joining the government, both Holder and Srinivasan represented companies that were subject to lawsuits similar to Kiobel, and both of their former clients would benefit if the Supreme Court adopts the position advocated by the Justice Department. We also hope to learn whether the U.S. government was lobbied by business interests.

This week I'm posting a series of updates on recent developments in human rights cases around the globe. Wednesday I wrote about a Dutch court awarding damages to a Palestinian doctor who survived torture in Libya, yesterday I highlighted a criminal complaint filed against Nestlé for complicity in the murder of a union leader, and today I conclude this series with an update on corporate liability in the U.K. . . .

One of the most interesting and exciting recent advances in corporate liability has come out of the U.K. courts in an asbestosis case.  In Chandler v. Cape plc, the England and Wales Court of Appeals decided last month that Cape plc could be liable for failing in its duty of care to exercise proper supervision of health and safety conditions for employees of its South African subsidiary.

This is the latest case to affirm the principle that courts can hold parent companies responsible for the actions or omissions of their subsidiaries in a variety of circumstances.  By incorporating subsidiaries, parent companies create a “corporate veil” that cannot usually be “pierced” when the subsidiaries incur tort or tax liabilities.  The corporate form allows parents to claim that their subsidiaries are solely responsible, and they do not share in that responsibility.  Courts will normally pierce the corporate veil only when there’s evidence that the subsidiary is a sham, created only to allow a parent company to fraudulently avoid responsibility for wrongful acts. 

However, as U.S. and U.K. courts have made clear, when the subsidiary is acting on behalf of the parent, or – as in the Cape case – when the parent has direct responsbility for the subsidiary, the parent can be held responsible even if the subsidiary’s business is legitimate.

The judgment in Cape is particularly important because of the clarity with which it states this principle.  In finding that the parent company took on a direct duty to its subsidiaries’ employees to prevent unsafe production and handling of asbestos, the court ruled:

This week I'm posting a series of updates on recent developments in human rights cases around the globe. Yesterday I wrote about a Dutch court awarding damages to a Palestinian doctor who survived torture in Libya. Today we move onto Colombia and Switzerland...

Luciano Romero, a leader of the Colombian trade union SINALTRAINAL, was assassinated in September 2005 as he prepared to attend a meeting of the Permanent People’s Tribunal to testify against his former employer, Nestlé subsidiary Cicolac – for its ties to paramilitary violence.  A Colombian criminal investigation into the responsibility of Cicolac officials, who had spread false rumors of Romero’s membership in guerilla groups and incited violence against him by telling milk suppliers with paramilitary ties that Romero’s activities would drive down their profitability, is stalled.  Meanwhile, the responsbility of Nestlé, the Swiss parent company, has simply been ignored by judicial authorities

The European Center for Constitutional and Human Rights (ECCHR), along with SINALTRAINAL , recently took a step toward addressing that gap by filing a criminal complaint in the company’s headquarters in Zug, Switzerland.  They claim that Nestlé acted with criminal neglect because it knew that its local representatives’ accusations against Romero and its economic ties to paramilitaries amounted to a death sentence for Romero but refused to take mitigating steps.  As the numbers of assassinated Cicolac labor leaders mounted, the trade union asked the parent company to intervene, but Nestlé responded that Cicolac had sole responsibility for its actions.  This is irreconcilable with Nestlé’s own policy statements, in which it pledges to take responsibility for the whole group’s compliance with internationally recognized labor rights.

With all the uproar around the Kiobel and Mohamad cases, I’ve been a bit remiss about updates on important legal developments in other parts of the world.  As we all watch the Supreme Court with anxiety, it’s important not to miss the fact that our partners elsewhere are pushing forward in the quest for effective judicial remedies for human rights abuses – particularly those related to corporate activity. Over the next few days, I'll be commenting  on a number of encouraging developments around the world, beginning today with Libya and the Netherlands...

On March 21, a Dutch court awarded 1 million euros to Palestinian doctor Ashraf El-Hojouj, who was tortured in a Libyan prison after being scapegoated for the infection of Libyan children with HIV.  Dr. Liesbeth Zegveld, an attorney with the law firm Böhler Advokaten – the same firm that is representing Nigerian villagers in an oil spill lawsuit against Shell – successfully argued that Dutch courts should hear the case, even though neither party was Dutch and the injuries were suffered abroad, based on a Dutch civil procedure rule allowing Dutch courts to hear cases that could not reasonably be filed in other countries, in the interests of justice.

I’d like to congratulate Dr. El-Hojouj, as well as Dr. Zegveld, for this exciting result, which was followed up this week by a decision of the U.N. Human Rights Council declaring Libya to have violated Dr. El-Hojouj’s rights to physical integrity, liberty, and fair trial.  This case is particularly significant for Kiobel watchers, because it shows that the civil courts of the Netherlands – Shell’s home – like those of many other countries, are open to human rights cases even when there is little connection to the forum and the defendant is foreign.

Do access to justice and accountability for grave abuses count when Canadian courts decide whether to consider a human rights lawsuit by foreigners against a company with operations in Québec?  The seven human rights NGOs, including ERI, who signed a public letter written by the International Corporate Accountability Roundtable (ICAR) hope that the Canadian Supreme Court will answer in the affirmative, and give the family members of the victims of a Congolese massacre a chance to seek justice in Canada.

In a blog post last month, I wrote about a devastating decision from the Québec Court of Appeals.  The court decided that Anvil Mining, which has an office in the province, could not be sued in Québec over allegations that it was complicit in crimes against humanity committed against inhabitants of the Congolese mining town of Kilwa.   As the signatories of the letter make clear, this decision closed an important avenue for the victims to seek justice for human rights abuses, brushing aside the fact that their attempts to hold Anvil responsible both in Congo and in Australia had been stymied by corruption, intimidation, and technical legal barriers.

According to the letter, it has recently been announced that Anvil was acquired by a Chinese metals company.  When Monterrico, a British mining company that was similarly being sued for human rights abuses in the U.K., was acquired by a Chinese company, the new owners decided to strip Monterrico’s assets from the U.K., which would have made satisfying a judgment next to impossible.  Fortunately, the British and Hong Kong courts issued freezing injunctions, requiring Monterrico to maintain assets sufficient to satisfy a judgment in the U.K. until the legal process was over. (In the end, Monterrico and the plaintiffs settled the case before trial.) 

Editorial Note: This morning the U.S. Supreme Court heard oral arguments in Kiobel v. Royal Dutch-Shell, a case which we have blogged about extensively over the past 18 months. Several of our staff members were in attendence, and four of them wrote brief initial impressions. This is one of those four.

It was an amazing experience to sit at the Kiobel argument with Katie Redford, who pioneered the legal theory behind corporate ATS litigation, to my left, and Charles Wiwa, whose uncle's experience at the hands of Shell exemplifies the need for corporate human rights liability, directly behind me.  

After watching the nine justices in action today, I'm not sure I have any insight into which way the decision will ultimately go. I can only hope a majority sees this case for what it means to the Wiwa family, the ERI crew, and all the other victims of corporate abuses -- a question of whether companies have been granted immunity from general liability rules for the worst crimes imaginable.