In the mid-1990s, reports emerged out of Burma that villagers in the remote Yadana region had been forced by the military to clear jungle for the construction of a $1.2 billion natural gas pipeline. The allegations were horrendous: To round up workers for the project, the Burmese military had resorted to torture, rape, and murder to enslave villagers, even throwing one woman's baby in a fire after killing her husband. Before long, U.S. human rights groups had filed suit against Unocal Corp. (UCL ), based in El Segundo, Calif., one of the four pipeline partners, on behalf of 15 unnamed Burmese villagers.
Now, after years of courtroom sparring, Unocal has quietly agreed to settle the suits, one filed in California state court and another in the U.S. District Court in Los Angeles. Although a court gag order has kept many details under wraps so far, insiders say that Unocal will pay about $30 million in damages to settle the cases. The award will include money for the 15 plaintiffs and for a fund to improve living conditions, health care, and education in the pipeline region. Unocal has declined further comment, although it has repeatedly denied any involvement in the abuses. Nevertheless, the company has acknowledged that the Burmese military, which has ruled the nation since it deposed the elected President in a 1988 coup, abused some workers.
The settlement may mark a milestone in human rights advocates' struggle to use U.S. courts to force American multinationals to protect their workers against abuse by repressive regimes. While the courts didn't issue a binding precedent in the case, the fact that Unocal has apparently agreed to cough up such a large sum after adamantly denying responsibility strengthens a major strategy of human rights groups. The Unocal case "shows that corporations have both direct and indirect human rights responsibilities," says Susan Aaronson, director of globalization studies at the Kenan Institute, a Washington think tank.
Unocal is the first of a series of U.S. multinationals to face allegations that they acquiesced in or benefited from human rights violations, committed mostly by authoritarian governments. Other defendants include ExxonMobil, Coca-Cola (KO ), Drummond, Occidental Petroleum, and Del Monte Foods. The companies are all fighting the suits. The cases hinge largely on a 1789 statute, the Alien Tort Claims Act, that allows foreign litigants to seek damages in U.S. courts for crimes against "the law of nations," generally murder, torture, kidnapping, and slavery. Last June, the U.S. Supreme Court upheld the use of the law against U.S.-based companies.
U.S. corporations and the Bush Administration have argued that companies shouldn't be held to a "vicarious liability" standard but should instead be held blameless unless involved directly in the crimes. But that defense doesn't seem as promising now. The Unocal case was headed for a California state jury on just such an indirect connection to the Burmese crimes when the company abruptly settled in mid-December. The federal case, still in the motions phase, appeared headed for a jury as well, says Terry Collingsworth, executive director of Washington's International Labor Rights Fund, one of three groups representing the Unocal plaintiffs. Now, U.S. companies may feel similar pressure to cut their losses and settle such suits.
By Paul Magnusson in Washington