Globalism in the Dock

Rangoon, the capital of Burma (now officially called Myanmar), is normally one of the most depressing cities in Asia. It usually exudes the desperate air of a decaying totalitarian metropolis: Beggars wander the central market, queuing for handouts of the worthless local currency, while paramilitary police block access to universities, political party offices and any other potential centers of opposition to the state. But in recent months, some signs of change have emerged. In May, pro-democracy advocate Aung San Suu Kyi, leader of the opposition to Burma's totalitarian junta, was released from house arrest. Suu Kyi vowed to continue her fight to liberate the Burmese from the ruling generals, who have impoverished the country.

Southeast of the capital, in areas abutting Thailand and refugee camps inside that neighboring nation, a group of poor Burmese villagers also are attempting to foment momentous global change. The villagers are suing American oil giant Unocal in a California state court, charging that Unocal is responsible for human-rights abuses committed by the Burmese military along the company's $1.2 billion Yadana gas pipeline, which stretches across eastern Burma and into Thailand. And for the first time, an American judge has refused to dismiss such a suit, guaranteeing the plaintiffs a trial. The state suit will open before a Los Angeles jury next February. If the landmark case brings exploitative behavior to light or results in a ruling against Unocal, legal scholars say, similar suits against other multinationals are more likely to proceed and corporate behavior may be forever changed.

The Unocal case dates back to the early 1990s, when the company, one of a consortium of partners, was considering building the pipeline and employing the Burmese military to provide security for the project. According to U Maung Maung, one of the plaintiffs' advocates, representatives for the villagers, who were not opposed to the pipeline at the time, met with Unocal to discuss concerns that construction without external monitoring would allow the military to conscript labor, a common practice in Burma. Maung Maung says Unocal ignored the villagers' concerns; Unocal spokesman Barry Lane says the company "has had constructive talks with a variety of groups." In any case, the pipeline was completed in 1998. By the mid-1990s, though, Thailand-based nongovernmental organizations (NGOs) had reported that refugees were fleeing Burma with stories of abuses committed in the Yadana region. In one report, the NGO Earth Rights International claimed villagers had been forced to porter in the pipeline region, watched fellow porters shot dead by the military for moving too slowly and even served as human minesweepers. "NGOs who had been talking to these villagers couldn't just stand by and watch," says Maung Maung. "We had to help them meet someone who could help them."

Maung Maung and others put a group of villagers in touch with Terry Collingsworth, director of the International Labor Rights Fund (ILRF) and a well-known human-rights lawyer. Collingsworth decided to sue Unocal under the Alien Tort Claims Act, an 18th-century law that had gone unused until, in 1980, a U.S. judge ruled that foreigners could sue one another in American courts over violations of international norms. Plaintiffs soon used the law to sue foreign individuals -- El Salvadoran generals, for example -- in U.S. courts for human-rights abuses committed abroad.

Collingsworth and others now want to broaden the statute to include companies operating abroad. The ILRF and 12 Burmese plaintiffs charge that Unocal should be held vicariously liable for the military's atrocities committed along the pipeline, which they say included pushing people into fires, assaulting villagers and forcing peasants to work. The plaintiffs believe their suit has merit because the legal principle of vicarious liability says partners in a joint venture are responsible for one another's actions. They think Unocal knew the military was committing abuses and the villagers could not get a fair hearing in military-run Burma's court system. The ILRF has asked for compensation for unpaid labor and punitive damages. Like several other Alien Tort suits, the Unocal case originally was tossed out of a federal court without trial when a judge in California found insufficient evidence that Unocal was responsible. In September of this year, the 9th U.S. Circuit Court of Appeals reinstated the federal suit, which may get it going again. But Collingsworth refiled in a state court, and this summer California Superior Court Judge Victoria Chaney ruled that Unocal could face vicarious liability. Now the case could go to trial, which would be a first.

The Unocal case could herald a deluge of litigation. "Since the early 1980s, a range of factors has made it easier for Alien Tort suits to get started," says Sarah Cleveland, an international human-rights law expert at the University of Texas. "American companies have invested more abroad, the Internet has made it easier for abused people to contact lawyers, big organizations like Amnesty have begun targeting companies and now we are beginning to see some judges willing to hear the cases, which could be the final step toward having a large number of suits against companies for their practices overseas." Indeed, the ILRF also has filed suit against ExxonMobil for abuses allegedly committed by the Indonesian military while employed by the oil giant, against Coca-Cola because its bottlers in Colombia allegedly are working with death squads to intimidate labor activists and against several other multinationals. Collingsworth's Colombian clients discovered the ILRF through a Web search.

If the ILRF wins the Unocal case, Cleveland says, the precedent would make it easier for other judges to find for plaintiffs and could dramatically affect companies' profitability, prompting them to reshape their business models. "Every company does a cost-benefit analysis before they engage in foreign investment," says Collingsworth. "If we win, we'll make companies rethink the cost of investing in places where there are horrific violations of human rights, or thinking that they can take advantage of looser regulatory environments abroad." Sean Murphy, a law professor at George Washington University, says, "The jury is definitely still out on whether you can win damages against a company using Alien Tort. But one big judgment could start the ball rolling."

The threat of litigation already appears to be having an impact. "Any executive who says he doesn't pay attention to these suits, and the shareholder campaigns that go with them, is either lying or ignorant about his business," says Elliot Schrage, a former executive at Gap Inc. "These suits may show that, as a company, you don't have to be responsible for human-rights abuses to lose the case, you just have to stand by and do nothing while abuses are being committed." Complicating companies' woes, shareholder activists have launched a wave of resolutions timed to coincide with Alien Tort suits, potentially depressing multinationals' stock prices; over the past five years, Unocal's shares have lagged behind its oil industry peers. Simon Billenness, an expert on socially responsible investing at Oxfam America, says fund managers have begun contacting him to discuss the impact of the suit on Unocal's stock. In response, Lane contends that it is the conduct of the Burmese military, not Unocal, at issue in the suit, and that Unocal respects shareholder activism as a basic tenet of corporate accountability.

Some multinationals have taken action to preempt suits and negative publicity. Oil giant BP has aggressively sought human-rights monitors and tasked them with assessing BP's potential new investments. Many American companies have pulled out of Burma. (One Burma expert, noting that Unocal is considering building another pipeline in the country, says, "Unocal clearly has decided they've invested so much in Burma already that they will put up with the bad publicity and just keep going there.") Norwegian petroleum firm Statoil has worked with Amnesty International to train Venezuelan judges in human-rights law.

Yet the Alien Tort litigation could have a more pernicious impact. Lane says that holding companies vicariously liable for the actions of their government partners would hamstring businesses operating anywhere in the world. "If you follow the Alien Tort logic, Starbucks could be held liable for brutality by the Seattle police if the police tried to protect a Starbucks shop from being smashed [in the 1999 demonstrations]," he says. What's more, some European oil and gas companies have proven more willing to operate in countries that American corporations have begun to shy away from, and they might pick up more business if U.S. petroleum firms become more reticent.

The Alien Tort suits also have attracted the attention of the U.S. Department of State, drawing the executive branch into the judiciary's natural realm. ExxonMobil asked the U.S. government to comment on the geopolitical implications of the ILRF suit. In July, the State Department sent a letter to the judge from the federal district court judge responsible for the Indonesia case, arguing that a suit against ExxonMobil could undermine America's war on terrorism (because Indonesia could become a haven for terrorists if foreign investment decreases and its economy stumbles). Unocal also has asked the State Department to comment on its case, and Collingsworth remains concerned about government interference. The ILRF worries that the United States will not give visas to all the Burmese villagers who need to testify in California, and some of the villagers fear they will be unable to remain as refugees in Thailand forever. Already, says Maung Maung, the military has threatened villagers' relatives in Burma. "If the Burmese wind up winning the case but can't go back home and have their families taken from them, that's not much of victory," he says.

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