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The Real Modern Pirates? MNCs Beyond the Rule of Law

Author: Terra Lawson-Remer
May 25, 2009
Huffington Post

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Recently Somali pirates surfaced as an imminent threat to the safety of cargo ships and seafarers. The U.S. government took firm measures in response: last month Navy Seals daringly rescued Captain Richard Phillips from a bobbing lifeboat in the Indian Ocean, shooting his captors while he stood a few feet away with his hands tied and an AK-47 at his back.

Pirates exploit the absence of government on the high seas to prey on unarmed civilians, in ruthless pursuit of bounty. But the modern-day pirates that present the most pervasive threat are not rogue Somali fishermen. The most common modern pirates are multinational corporations operating beyond the rule of law.

When governments are weak or corrupt -- in countries like Somalia and Nigeria -- MNCs escape accountability for arbitrary arrest, torture, and summary executions committed in reckless pursuit of profit. The U.S. can and should take firm measures against this kind of piracy, just as we have against the Somali pirates.

On May 27th the Southern District Court of New York hears a landmark case. Nigerian villagers are suing Shell Oil for human rights abuses committed in collusion with the Nigerian military government.

Shell's operations in the Ogoni area of Nigeria began in 1958. Pollution from oil production soon contaminated the local water supply and agricultural land. Moreover, desperately poor locals were excluded from the oil wealth, which flowed primarily to the central military government and Shell's shareholders. When local opposition surfaced to Royal Dutch/Shell's oil production, the company colluded with the Nigerian military to suppress demonstrations and arrest nine Ogoni opposition leaders. The Ogoni Nine were hanged in 1995 after a show "trial" before a special military tribunal, which was based on fabricated charges and testimony from witnesses bribed by Shell.

The Ogoni villagers cannot demand justice from Shell in Nigerian courts: the Nigerian government receives over 50% of oil revenue, the independence of the judiciary is weak, and the State has every reason to obstruct a case that would lay the groundwork for its own liability.

The Wiwa v. Royal Dutch Petroleum lawsuit -- which has taken more than a dozen years to overcome procedural hurdles and win the Ogoni their day in court -- is brought under the obscure Alien Tort Claims Act. The ATCA gives citizens of other countries the right to sue in U.S. courts for egregious violations of international law. By allowing U.S. courts to decide cases even when neither party has a significant connection to the United States, the ATCA provides a forum to victims, such as the Ogoni plaintiffs, who could not otherwise pursue justice.

A young U.S. Congress enacted the Alien Tort Claims Act in 1789 to assure foreign governments that their citizens could seek redress in U.S. federal courts for violations of international law. In the era that the ATCA was enacted, the principal offenses against the law of nations were of three kinds: violation of safe-conducts, infringement of the rights of ambassadors, and piracy. In addition to protecting foreign diplomats from assaults, one of the main purposes of the ATCA was to give victims of piracy a way to seek justice for attacks committed on the high seas, where the rule of law was absent because no government held sway.

Unfortunately, currently the ATCA sets the bar too high on eligible grievances for the realities of today's global economy. U.S. courts cannot hear lawsuits against companies for terrible conduct that does not meet the very narrow legal definition of a "violation of the law of nations." For example, while genocide and torture meet this standard, purposefully releasing cancer-causing toxic chemicals does not. Most previous human rights cases against multinational corporations brought under the ATCA have been either settled out of court, or dismissed because the injuries suffered by the victims did not meet the too narrow, outdated legal standard.

The Shell case is one of the first ATCA lawsuits against a multinational corporation that is likely to be decided on the merits. This is an important step in the right direction in terms of holding MNCs operating outside the United States accountable for human rights violations, but it's not enough. Congress can and should expand the ATCA to make it easier for victims of human rights abuses to seek justice for crimes committed in countries where the rule of law is weak.

Of course, most multinational corporations do not torture and arrest people opposed to their business activities. Corporate investment can be good for both poor people in emerging economies and a corporations' rich country shareholders. But when left unregulated, MNCs following their private interest can undermine the public good. (If nothing else, this is the lesson from the recent financial crisis). In Nigeria, it was directly in Shell's interest to help suppress opposition that threatened the continued operation of its very sizable and profitable oil investment.

Adam Smith's invisible hand requires the guiding rails of government and the rule of law, so that companies don't run roughshod over human rights in pursuit of profit. Shell thought it would not be held accountable for abetting the torture, arbitrary arrest, and summary execution of Nigerian opposition leaders. The ATCA was devised to extend the rule of law to pirates beyond our shores. In today's global economy, this means using the ATCA to hold accountable the most pervasive modern pirates: rogue corporations operating where the rule of law is weak. When corrupt host states where MNCs operate cannot or will not provide the guiding rails of law, the U.S. must.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.