Torture Suits Against Companies Including Shell Draw U.S High Court Review

The U.S. Supreme Court agreed to use a case involving units of Royal Dutch Shell Plc (RDSA) to consider whether corporations can be sued under federal laws that protect people in other countries from human rights abuses.

The justices today said they will hear two appeals on the issue, including one from a group of Nigerians who say two Shell units were complicit in torture and execution in the country’s Ogoni region from 1992 to 1995. A federal appeals court threw out the case, saying companies can’t be sued under the two- century-old Alien Tort Statute.

The lower court ruling created “a blanket immunity for corporations engaged or complicit in universally condemned human rights violations,” the alleged victims argued in their appeal.

Multinational companies have faced dozens of suits accusing them of playing a role in human rights violations, environmental wrongdoing and labor abuses. Exxon Mobil Corp. (XOM), Coca-Cola Co. (KO), Pfizer Inc. (PFE), Unocal Corp., Chevron Corp. (CVX) and Ford Motor Co. (F) have all been sued under either the Alien Tort Statute or a related law, known as the Torture Victim Protection Act or TVPA.

The justices also accepted a case that may determine whether companies can be sued under the TVPA. In that case a federal appeals court threw out a suit filed against the Palestinian Authority and the Palestinian Liberation Organization by the sons and widow of Azzam Rahim, a U.S. citizen allegedly tortured and murdered in the West Bank during the 1990s.

Appeals Courts

A Supreme Court decision in favor of the two units, Shell Petroleum NV and Shell Transport and Trading Co., would change the law in much of the country. Most federal appeals courts to consider the issue have said that companies can be sued under the 1789 Alien Tort Statute, just like individuals.

In siding with Shell, based in The Hague, the 2nd U.S. Circuit Court of Appeals in New York concluded that the Alien Tort Statute was aimed at a narrow class of violations of international law.

“Imposing liability on corporations for violations of customary international law has not attained a discernible, much less universal, acceptance among nations of the world,” the appeals court majority said. The three-judge panel divided 2-1 on the issue.

Third Judge

Shell urged the Supreme Court not to hear the appeal, saying even the third judge on the panel would have rejected the lawsuit, though for different reasons.

The Nigerians claim the Shell units aided in the torture and murder of dissidents in the 1990s, including the playwright Ken Saro-Wiwa.

Kayla Macke, a Shell spokeswoman in Houston, said the company wouldn’t comment on the Supreme Court case.

In the Palestinian case, the central issue is a TVPA provision that authorizes suits against “an individual” engaged in torture. In throwing out the suit, a federal appeals court in Washington said that term means “only natural persons,” not corporations or organizations such as the PLO and Palestinian Authority.

The court will hear arguments in both cases early next year and probably rule by June.

The Shell case is Kiobel v. Shell Petroleum, 10-1491. The Palestinian case is Mohamad v. Rajoub, 11-88.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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