Human rights ruling worries multinationals | Globalization | DW | 10.05.2013
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Human rights ruling worries multinationals

A US Supreme Court ruling dismissing a case against Shell Oil may have ramifications for international companies that operate in the US. An upcoming trial against Daimler will further test the legal waters.

At the end of last month, the US Supreme Court ruled that human rights breaches that have been committed by multinationals can only be tried in US federal courts if the company has a link to the US.

In the case of "Kiobel v. Shell," the oil company was alleged to have assisted murder squads and torture in Nigeria. The case was brought by the widow of Barinem Kiobel, a spokesman for the Ogoni people of the Niger Delta. Kiobel was sentenced to death by hanging in Nigeria, and his conviction was apparently due to false statements by Shell.

According to the German Institute for Human Rights, the US court "had dashed human rights hopes around the world" with its decision. In the last few years, US courts have often been seen as the last hope for the pursuit of human rights abuses. The basis for that was the Alien Tort Statute (ATS), which dates back to 1789.

The law allows foreigners to approach US courts, as soon as a breach of international law took place. In the beginning it was used to tackle piracy in countries that didn't have a suitable legal framework, such as the Bahamas, Cuba and the Cayman Islands. More recently, it was used to pursue Latin American dictators.

But some options still remain open to those who want to bring future similar cases in the US. Companies with substantial US connections can still be held liable and actions can still be brought before national courts in accordance with US federal law.

Daimler: the next test

Widows at a memorial outside the Daimler offices (photo: Gaby Weber)

Widows honour the dead at a memorial outside the Daimler offices in Buenos Aires

The second path is being taken by Terrence Collingsworth, the lawyer for the relatives of members of the works council of Mercedes-Benz Argentina. Between 1976 and 1978, the plaintiff's allege, up to 20 members of the company's works council were arrested, tortured and some were even killed.

Since 2004 Collingsworth has been working to get a court case against Daimler heard in San Francisco, under the US-ratified Convention against Torture and Californian state law.

"The appeal court in San Francisco was the same opinion as us and approved jurisdiction for this case in November 2011," Collingsworth told DW. The court held that the company made huge profits in California and therefore they are subject to the state's laws.

Daimler says that the cases should be dealt with in Germany, where the headquarters of the company are located, or in Argentina, where the crimes are meant to have taken place. But until 2003 there were immunity laws in place there.

Eduardo Fachal, Argentinian lawyer (photo: Gaby Weber)

Argentian attorney Eduardo Fachal

"After that we pressed charges against the company in Argentina," said Eduardo Fachal, the Argentinian lawyer for the victims. "But the investigations have stalled."

National courts unable to cope

The German Institute for Human Rights also noticed the same problem, and for this reason pushed for the Kiobel case to take place in the US. According to them, the countries in which the crimes took place either had court systems that couldn't cope with such a case or governments that could be bribed.

The organization says that it is highly interested in the case because it believes the German government is confused about the relationship between state sovereignty and state responsibility to protect human rights.

The German government has said that diplomatic relations could become worse, should US courts get jurisdiction over foreign companies.

"The German government believes that the overseas influence of such courts would be contrary to international law and would create a substantial risk of jurisdictional conflicts with other countries."

US lawyer, Terrence Collingsworth (photo: Collingsworth)

US lawyer Terrence Collingsworth expects the Daimler case to become a landmark case

Even the United States Chamber of Commerce as well as banks and mining companies are of the same opinion. The recent US Supreme Court decision backs up their views. Now, heavy fines against foreign firms can't be brought and conflicts between governments can be avoided, said the majority of judges in the judgment.  

The case against Daimler is set to head to Washington in October. It threatens to be a landmark case, says Collingsworth. He is confident that jurisdiction over the case will be granted, in accordance with Californian and federal law.

"That will set the boundaries for global businesses," says Collingsworth.

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