Papua New Guinea Landowners Face New Hearing in Rio Tinto Case

Dec. 16 (Bloomberg) -- Papua New Guinea landowners who sued Rio Tinto Group over claims of human-rights abuses must show that they aren’t required to exhaust legal options at home before pursuing the U.S. case, an appeals court said.

The court in San Francisco, in a 7-4 decision today, ordered a district court judge to decide whether an “exhaustion requirement” should be imposed on the plaintiffs.

The Alien Tort Statute allows foreigners to sue in the U.S. for crimes that violate international law or a U.S. treaty. The Supreme Court has ruled that, in some cases, plaintiffs may be required to prove they have exhausted all legal means in their own country.

“We hold that this is an ‘appropriate case,” Judge Margaret McKeown wrote for the U.S. 9th Circuit Court of Appeals.

Judge Stephen Reinhardt, writing for three others, dissented, saying the Supreme Court didn’t impose an exhaustion requirement and the law, enacted in 1789, doesn’t require it.

The landowners claim a former copper mine on Bougainville Island contributed to the deaths of thousands of people and damaged the environment. The 9th Circuit ruled in August 2006 that 12 landowners, who seek to represent thousands of others, could proceed with claims of war crimes, racial discrimination and environmental damage, reversing a lower court ruling dismissing the suit.

London-based Rio Tinto’s Panguna mine was shut in 1989 after attacks by the Papua New Guinea army, according to the court ruling. The landowners sued in 2000. The U.S. State Department said in 2001 that the lawsuit would harm U.S. relations with Papua New Guinea, which later said that the case didn’t affect diplomatic relations and should proceed, the appeals court said.

The case is Alexis Holyweek Sarei v. Rio Tinto PLC, 02- 56256, 9th U.S. Circuit Court of Appeals (San Francisco).

To contact the reporter about this story: Karen Gullo in San Francisco at kgullo@bloomberg.net; Joe Schneider in Toronto at jschneider5@bloomberg.net.