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US Supreme Court to Hear Nigeria-Shell Case

A lawsuit in America may have major implications for corporations' liability for human rights abuses overseas.
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An anti-Shell protest in Washington DC

On October 17, 2011, the US Supreme Court agreed to use a landmark case involving Nigerian plaintiffs to consider if corporations can be liable for human rights violations, such as torture or genocide, committed overseas. The case is Kiobel v Royal Dutch Shell Petroleum Plc. The defendant, the oil giant Shell, is being accused of committing a series of international crimes through its Nigerian subsidiary, Shell Petroleum Development Company of Nigeria (SPDC). The alleged violations include kidnap, torture and the executions of prominent Nigerian environmental activists in the Niger Delta region in the 1990s.

The background

The Kiobel v Royal Dutch Shell Plc case is one of many law suits against prominent multinationals such as Exxon Mobil, Coca-Cola, Pfizer Inc, Unocal Corp and Chevron Corp over their alleged violations of human rights and other internationally proclaimed standards such as environmental protection. The basis of these suits is found in a well crafted 200-year-old piece of US legislation called the Alien Tort Statute (ATS), which allows foreigners to seek redress for a "civil action" committed in violation of international law. Kiobel centers on the killing of Dr Barinem Kiobel, an Ogoni activist who was executed at the same time as prominent Nigerian writer and environmental activist, Ken Saro-Wiwa. The lawsuit alleges that via its subsidiary SPDC, Shell provided transportation for Nigerian troops, allowed company property to be used as staging areas for attacks against the local Ogoni people, provided food to the soldiers and paid them.

The importance of the US Supreme Court hearing

On September 17, 2010, the US Court of Appeals for the Second Circuit (New York), in a 2-1 decision, held that corporations cannot be held liable for violations of customary international law. On October 14, 2010, the plaintiffs filed a petition for a rehearing with the court. On February 4, the court of appeals refused to rehear the case. The plaintiffs petitioned the Supreme Court in June asking it to hear an appeal of the lower court's ruling. On October 17, the Supreme Court announced that it would hear the plaintiffs' appeal in this case - both parties are expected to present their arguments by June 2012. This decision by the Supreme Court is important. Many pro-business groups and lobbyists such as the US Chamber of Commerce had welcomed the defendant’s grants of motion for dismissal on the grounds that corporations could not be held accountable for human rights violations through international law. Therefore the Supreme Court’s decision to hear this appeal should be a shock to them and others who had celebrated the death of the ATS with respect to corporate accountability.

Enormous consequences

The Supreme Court's decision may have enormous consequences for how major corporations, with their enormous financial and political capital, consider the issues of human rights and other social factors in their risk management indices.

According to data collected from the World Investment Report 2009, published by the the United Nations Conference on Trade and Development (UNCTAD), there are now more than 889,416 multinationals, with the top 100 making accumulated annual sales exceeding $8.5 trillion. Following the partial collapse of most economies in Africa in the late 1980s and the implementation of the IMF Structural Adjustment Programmes over the past two decades, the African continent witnessed an influx of these giants. Many Western firms were attracted to the un-scrutinised privatisation process that engulfed states in the aftermath of adjustment.

The 1990s was a peak in civil unrest in Africa, and major multinationals took advantage of the vast resources these turbulent nations had. In Angola, Sierra Leone, the Democratic Republic of Congo, Liberia and the Central African Republic, western-based firms exchanged money for minerals, which it is widely argued helped fuel conflicts.

One of many

Any judgment the US Supreme Court pronounces will impact morale amongst human rights activists in Africa. Since 2000, Africa has recorded a number of high profile cases under the ATS legislation, including Presbyterian Church of Sudan v Talisman Energy Plc. (the support offered by the Canadian mining giant to Sudanese troops and their subsequent atrocities in Darfur), Bowoto v Chevron Corp. (events that occurred on a Chevron offshore drilling platform in 1998 when Nigerian soldiers suppressed a protest against Chevron's environmental and business practices), Khulumani v. Barclays Bank Plc. (case brought by apartheid victims in South Africa for the role of the defendant in sustaining the racial regime), Abdullahi v. Pfizer Inc. (group of Nigerian minors who sued the defendant for the grave injuries suffered from the administering of a trial vaccine in Kano State) and Wiwa v. Royal Dutch Shell Plc (same facts as Kiobel). However, most of these suits have been thrown out of court for forum non conveniens - the inability of a court to entertain a case for lack of subject matter jurisdiction.

Under the ATS, the US remains the only forum for victims of this category all over the world. As the court now determines whether or not lower courts can continue to entertain these kinds of lawsuits, international human rights lawyers will stay alert. A positive outcome will bode well for victims from societies where corporate regulation is less and unscrupulous corporate practice is at its most severe.

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