Tag Archives: corporate liability

Foreign Corporate Immunity: Chevron/Canada against Ecuador

A Toronto judge halted on May 1, 2013 an effort to enforce a $19 billion Ecuadorean judgment against U.S. oil company Chevron Corp in Canada, finding that his Ontario provincial court was the wrong place for the case.  The action is the latest skirmish in a two-decade conflict between Chevron and residents of Ecuador’s Lago Agrio region over claims that Texaco, which Chevron acquired in 2001, contaminated the area from 1964 to 1992.

Citing Chevron’s promise to fight the plaintiffs until “hell freezes over, and then fight it out on the ice,” Justice David Brown of the Ontario court foresaw a “bitter, protracted” battle that would be costly and time consuming.  “While Ontario enjoys a bountiful supply of ice for part of each year, Ontario is not the place for that fight,” Brown wrote in his ruling on Wednesday. “Ontario courts should be reluctant to dedicate their resources to disputes where, in dollars and cents terms, there is nothing to fight over.”

Alan Lenczner, principal lawyer in Toronto for the Ecuadorean plaintiffs, said they would definitely appeal, arguing that a multinational company could not be immune from enforcement in a country where it earns so much. “Chevron Corp itself earns no money,” he said in a statement. “All its earnings and profits come from subsidiaries including, importantly, Chevron Canada.”  Chevron Canada’s assets are worth more than $12 billion, the plaintiffs had said, and alongside separate actions in Argentina and Brazil, they had sought to persuade the Ontario court to collect the damages awarded to them by the South American court.

Chevron, the second-largest U.S. oil company, has steadfastly refused to pay, saying the February 2011 ruling by the court in Lago Agrio was influenced by fraud and bribery. A related fraud case goes to trial in New York in October.  The Supreme Court of Canada has ruled that the country’s courts can recognize and enforce foreign judgments in cases where there is a “reasonable and substantial connection” between the cause of the action and the foreign court. Chevron called Brown’s ruling a “significant setback” to the Ecuadoreans’ strategy of seeking enforcement against subsidiaries that were not parties to the Ecuador case.  “The plaintiffs should be seeking enforcement in the United States – where Chevron Corporation resides. In the U.S., however, they would be confronted by the fact that eight federal courts have already found the Ecuador trial tainted by fraud,” Chevron said in a statement. Last month, a consulting firm whose work helped lead to the $19 billion award against Chevron disavowed some environmental claims used to obtain the judgment.

Excerpt, Judge halts Chevron-Ecuador enforcement action in Canada, Reuters, May 1, 2013

See also how Chevron Destroyed the Paper Trail

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How to Avoid the Carbon Tax: corporations and climate change

According to the Union of Concerned Scientists (UCS),  a Climate of Corporate Control, statements and actions on climate science and policy by 28 U.S. companies, shows how these contributions can be problematic, and suggests steps that Congress, the public, the media, and companies themselves can take to address the problem.  Corporations have the right, of course, to weigh in on public policy issues that affect their interests. But too often they do so irresponsibly, misrepresenting and misusing science at the public’s expense, and in recent years their influence has grown.

Corporations skew the national dialogue on climate policy in a variety of ways—making inconsistent statements across different venues, attacking science through industry-supported organizations, and taking advantage of the secrecy allowed them by current legal and regulatory structures.

Inconsistency: Having It Both Ways–Some corporations are contradictory in their actions, expressing concern about the threat of climate change in some venues—such as company websites, Security and Exchange Commission (SEC) filings, annual reports, or statements to Congress—while working to weaken policy responses to climate change in others.  For example, ConocoPhillips has acknowledged on its website that “human activity…is contributing to increased concentrations of greenhouse gases in the atmosphere that can lead to adverse changes in global climate.” Yet in its comments on the 2009 EPA Endangerment Finding, the company claimed that “the support for the effects of climate change on public health and welfare is limited and is typified by a high degree of uncertainty.”

Using Outside Organizations: Contrarians By Proxy–One way a company can work against effective climate policy while avoiding accountability for that work is to provide funding to outside groups that lobby against climate legislation and regulation or engage in advocacy campaigns against climate science. Such groups range from business associations such as the National Association of Manufacturers to front groups like the Heartland Institute.

Echoing the inconsistency in their other statements and actions on the issue, many companies belong to groups lobbying on both sides of the climate policy debate. For example, Caterpillar is affiliated both with the World Resources Institute and Nature Conservancy, which advocate global warming solutions, and with the Cato Institute and Heritage Foundation, which oppose them.  Of course, corporations may point out that the organizations they support work on many issues besides climate—but the fact remains that many of these groups take starkly anti-science positions on climate change and work aggressively to challenge science-based climate policies.

A Lack of Transparency–When business interests can hide their influence on policy-making processes from public view, it becomes easier for them to manipulate perceptions of science and skew policy discussions. There are several areas in which greater transparency is needed:  Charitable contributions. Current law only requires corporate foundations to disclose their donations to the IRS; companies can get around this requirement by making their donations directly, bypassing their foundations. This information is also hidden from shareholders: several corporations have received proposals from their shareholders demanding access to the company’s charitable contributions, and legislation to require such disclosure has been proposed in Congress.  Lobbying and political expenditures. While companies are legally required to report their total expenditures on political contributions and lobbying, they are not required to disclose the particular issues for which these contributions are targeted. So it is not possible to determine how much lobbying corporations are doing on climate issues. Business risks from climate change. Publicly traded companies are required to discuss risks that might materially affect their business in their annual SEC filings. The report shows that compliance with this requirement with regard to climate change is not consistent; some companies address climate-related risks fully, some discuss only the possible impacts of climate regulation, neglecting the physical impacts of climate change, and others ignore the issue entirely.

Good and Bad Behavior–It’s not all bad news out there: The report shows that some companies, such as NIKE, appear to be consistently constructive in their climate-related statements and actions.  At the other extreme, some companies appear to be almost uniformly obstructionist on climate issues. This list is dominated by fossil-fuel companies such as Peabody Energy and Marathon Oil.  But because of the lack of disclosure, it is impossible to say for sure whether companies are completely constructive or obstructionist.  Inappropriate corporate influence on the national dialogue on climate science and policy is a large-scale, complex problem requiring large-scale, complex solutions.

Excerpt from A Climate of Corporate Control

 

The Protection of Human Rights in Domestic Courts: Nigerians versus Royal Dutch Shell

The Supreme Court will weigh next week whether corporations can be sued in the United States for suspected complicity in human rights abuses abroad, in a case being closely watched by businesses concerned about long and costly litigation.  The high court on Tuesday will consider the reach of a 1789 U.S. law that had been largely dormant until 1980, when human rights lawyers started using it, at first to sue foreign government officials. Then, over the next 20 years, the lawyers used the law to target multinational corporations.

The case before the court pits the Obama administration and human rights advocates against large companies and foreign governments over allegations that Royal Dutch Shell Plc helped Nigeria crush oil exploration protests in the 1990s. Administration attorneys and lawyers for the plaintiffs contend corporations can be held accountable in U.S. courts for committing or assisting foreign governments in torture, executions or other human rights abuses.  Attorneys for corporations argue that only individuals, such as company employees or managers involved in the abuse, can be sued, a position adopted by a U.S. appeals court in New York. Other courts ruled corporations can be held liable.

The justices will hear an appeal by a group of Nigerians who argue they should be allowed to proceed with a lawsuit accusing Shell of aiding the Nigerian government in human rights violations between 1992 and 1995.

California attorney Paul Hoffman, who will argue on behalf of the plaintiffs, said corporations, under the 1789 law, were permissible defendants and that corporate civil liability was a general principle of international law.  “Businesses involved in genocide, crimes against humanity or other serious human rights violations deserve no exemption from tort liability,” he said in a brief filed with the court.  The Obama administration supported the corporate liability argument, as did international human rights organizations and Navi Pillay, the United Nations High Commissioner for Human Rights.

Representing Shell at the arguments, Kathleen Sullivan, a former dean of the Stanford Law School in California, said U.S. and international law do not allow corporate liability for the alleged offenses. She said the post-World War Two Nuremberg tribunals covered prosecutions of individuals, not corporations.  She warned of the consequences of allowing such lawsuits.  “Even a meritless … suit against a corporation can take years to resolve,” she said in a brief, adding that corporations may reduce their operations in less-developed nations where such abuses tend to arise.

The British, Dutch and German governments supported Shell and said it violates international law to apply a U.S. law from more than 200 years ago to acts that take place in other countries and have no connection to the United States.  Also backing Shell are various multinational corporations and the U.S. Chamber of Commerce business lobby. Robin Conrad, head of the group’s legal arm, said that if the Supreme Court upholds corporate liability, “the global business community will face yet another wave of frivolous and expensive litigation.”

In the past two decades, more than 120 lawsuits have been filed in U.S. courts against 59 corporations for alleged wrongful acts in 60 foreign countries, lawyers in the case said.  Many of the lawsuits have been unsuccessful, though there have been a handful of settlements, the lawyers said. Many of the cases, having dragged on for years, are still pending.

Among the cases: Indonesia villagers accused Exxon Mobil Corp’s security forces of murder, torture and other abuses in 1999-2001; Firestone tire company was accused of using child labor in Liberia; and Ford Motor Co and other firms were accused of aiding South Africa’s apartheid system.

The Supreme Court case is Esther Kiobel v. Royal Dutch Petroleum Co, No. 10-1491 (pdf arguments of the Obama Administration)

By James Vicini, Supreme Court to hear corporate human rights case, Reuters, Feb. 25, 2012