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Shell shocked and in the dock By Oliver Balch As Shell finally stands trial for its alleged complicity in the death of Nigerian activist Ken Saro-Wiwa, the case could have significant implications for international corporate liability

n November 10 1995 in a prison in Port Harcourt, Nigeria, a nameless hangman slipped a noose around the neck of Ken SaroWiwa. Several minutes later, the activist’s inert body hung lifeless from the end of the rope. It was a busy day for the hangman – he had eight more executions to do. More than a decade later, oil major Royal Dutch Shell is due in court in New York on charges of complicity in the deaths. The connection between these two events remains hotly disputed. Only a few facts enjoy general consensus. No one contends that the nine men, all leaders of Nigeria’s Ogoni people, were executed. Few outside Nigeria’s former junta seriously argue that the Nigerian court provided a free and fair trial. Nor is there dispute that Shell was one of the largest foreign investors in the Ogonis’ oil-rich homeland. Beyond that, the issue remains a mishmash of grey. The relatives of the activists argue that the executions were carried out with the “knowledge, consent and/or support” of Shell. The case is being brought in the US

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Aliens in New York To understand how an Anglo-Dutch oil company happens to find itself in a US court for alleged abuses in Nigeria requires some background. At the heart of the issue lies the ATCA. The statute allows for international human rights violations to be heard in a US federal court. First ratified in 1789, the legal principle behind the act finds its origins in British common law: namely, that a defendant can be sued wherever they are found for anything they have done anywhere in the world. Despite the law’s wide-ranging potential, it sat gathering dust in legal textbooks for two centuries. Only in the 1980 did litigators seek to test it in court. Initially, the attentions of US litigators focused on perpetrators of state-led human rights abuses. A Paraguayan citizen brought the first case, successfully using the ATCA to sue a policeman who tortured and killed his son. Subsequent cases concentrated on individuals who committed international torts or government leaders who ordered them to do so. In 1995, an important legal development occurred. A ruling in a suit against the Bosnian Serb alleged war criminal Radovan Karadzic held that non-government officials could also be sued under the ATCA. Into that bracket fell private companies. The ruling has inspired an incremental trickle of ATCA cases against companies, each of which has helped refine and clarify the precise intention of the statute. Over the years, two legal prerequisites for ATCA cases have emerged. First, the offence in question must constitute an egregious contravention of international human rights. So torture and genocide count, for example, but refusing the right to collective bargaining would not. Second, the accused

Who was Ken Saro-Wiwa? Author, television producer and environmental activist, Kenule “Ken” Beeson Saro-Wiwa was president of the Movement for the Survival of Ogoni People (Mosop), a Nigerian civil rights group. In 1990, Mosop published a bill of rights that accused the then junta of governmental neglect, lack of social services and political marginalisation. Under Saro-Wiwa, Mosop led campaigns against Shell and other multinational companies, which it accused of causing environmental damage in the Niger delta. Saro-Wiwa and eight fellow activists were sentenced to death by a Nigerian court for breaking a ban on public gatherings. They were executed on November 10 1995. In 1996, relatives of the deceased initiated a lawsuit in the US against oil company Shell for alleged complicity in the executions. The case (Wiwa v Royal Dutch Petroleum, 96-cv-8386) was filed under the Alien Tort Claims Act. The US district court of New York’s southern district was scheduled to hear the case from May 26.

company must be shown to have knowingly aided and abetted the perpetrator. After much to-ing and fro-ing between the appeal courts, US district judge Kimba Wood recently ruled that the plaintiffs in the Saro-Wiwa case met the necessary requirements to proceed to trial. Legal minefield It comes as no surprise that activists throughout the world have welcomed the judge’s decision. Or that they are eagerly watching how the case develops. “The ATCA is a huge, huge benefit for those that want to use the American legal system, American courts and the American damages structure to address wrongdoing around the world,” says Prof Anthony Sebok of New York’s Cardozo law school, Yeshiva University. Getting a case to court is one thing, but gaining a victory is quite another, he admits. To date, only Alabama-based mining company Drummond and California-domiciled oil company Chevron have actually been sued in a US court under the ATCA. In neither case did the plaintiffs win. Not that affected parties should lose heart. Several companies have settled out of court. California-based energy company Unocal, which stood accused of complicity in human rights abuses in Burma, is a notable example. The claims made against Shell are “not exotic” from the perspective of municipal

The struggle goes on

law, Sebok states. That is to say, the concept of being held responsible for substantially and knowingly aiding an extrajudicial murder is well established. Nor are US courts unwilling in principle to hear ATCA cases against companies. REUTERS

under the controversial Alien Tort Claims Act (ATCA), also known as the Alien Tort Statute. From the outset, Shell has denied all involvement in the hangings. Indeed, the company says it spoke out both publicly and privately on human rights on “a number of occasions”. After the prosecution of the activists, Shell’s chairman appealed to the head of the Nigeria’s military regime for clemency. The new court case has been heralded as a landmark for corporate accountability. But why? And what could it mean for other companies?

A flaring breach

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What campaigners say “Regardless of the outcome of the trial, the fact that one of the planet’s most powerful companies finds itself in the dock changes everything. From now on, no transnational corporation involved in possible human rights abuses will feel completely safe.” George Monbiot, journalist and campaigner “The cases that have gone to trial may not have been great cases, but certainly the law still stands and with the right set of facts you could see a jury verdict and a potential settling.” Anthony Sebok, professor of law, Benjamin N Cardozo school of law, Yeshiva University “There is a huge risk that if the judge decides there’s enough evidence not to throw out the case previously, then there’s enough evidence for the jury to find the corporation liable.” Bridget Arimond, director, International Human Rights Programme, Northwestern University school of law “[The ATCA] is one of the few mechanisms that we have in the western world to hold companies to account for their activities abroad. That’s why the ATCA needs to be strengthened.” Steve Kretzmann, executive director, Oil Change International “If Shell loses, it would have a very positive effect on corporate behaviour internationally, recognising that whatever they do outside the US they can be held to account for at home. That’s the message we want to send to corporate boardrooms: just because they’re not in the US, they’re not above the law.” Marco Simons, legal director, EarthRights International “Our experience has been that litigation focuses the minds of CEOs wonderfully … The best outcome would be for this litigation to serve as a wake-up call for corporate executives to say this [human rights] is a serious issue.” Naomi Roht-Arriaza, professor of law, Hastings college of law, University of California “The fact that this has come to court is very significant. It means that a lot of the company’s ways of working and operations with internal procedures will be dragged through the courts and will become part of the public domain.” Peter Frankental, economic relations programme director, Amnesty International UK

“Judges have not used their discretion so far to suppress the use of this litigation [although] they are still trying to understand what the law means,” Sebok adds. Yet important legal barriers still exist. Some are practical. Affected communities are often located in remote corners of the

“The ATCA is a huge, huge benefit for those that want to use the US legal system” Anthony Sebok, Cardozo law school world where communication during the pre-trial stage can be difficult. Persuading a US jury to connect with events on the ground in far-off jurisdictions also presents its problems. In addition, the financial cost of building an effective case can be prohibitive, adds Marco Simons, legal director at EarthRights International, counsel for the plaintiffs – the relatives of the executed men – in the Shell case. “You are litigating against large corporations with lots of resources so cases can often be very expensive,” Simons says.

And companies are not slow to exercise their legal muscle – known in legal circles as “snowing” the opposition. In Shell’s case, the oil major’s submission of innumerable legal motions successfully delayed the case for more than 12 years. “Most cases that have been brought against corporations under the ATCA have been dismissed at least once, which is why so few cases have gone to trial so far,” Simons says. The grounds for dispute are substantial. The ATCA, it should be noted, is a statute of only one sentence. Most objections rest on one of two issues: jurisdiction and liability. Simons identifies a number of “cynical” ways that companies exploit each of these avenues. Creating jurisdictional anomalies by shielding themselves behind layers of subsidiaries is one popular tactic. Shifting corporate headquarters offshore to remove themselves from US jurisdiction represents another. Efforts at legal evasion are becoming harder, however. “When this case was filed, so many of the legal issues were unsettled and undecided. Many of those have since been decided over the years,” Simons says. Though important, greater legal clarity

Connecting with a NY jury not easy

only constitutes a first step. Affected parties still need to gather the requisite evidence to win their case. “We spent 10 years working on the law part, [proving] that you could actually bring these cases … Now attention is turning to the fact that you still have to convince a jury,” observes Prof Naomi Roht-Arriaza of California University’s Hastings College of Law. Historic landmark The Shell case should shed some light on this second, evidentiary stage of ATCA litigation. What facts are required to prove a company “aided and abetted” in human rights abuses? Is proof of regular meetings with the perpetrators enough? All this remains to be decided in court. Whatever the jury decides, the very fact that the case is proceeding to trial is noteworthy, says Prof Bridget Arimond, director of the international human rights

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What is the ATCA? Ratified by the first US Congress in 1789, the Alien Tort Claims Act enables victims of international human rights abuses to sue in US federal courts. In recent years, the ATCA has been used to try and hold multinational companies to account for alleged complicity in human rights violations, including torture, extrajudicial killing, forced labour and genocide. To date, only two cases have reached court. In both incidences, the jury found against the plaintiffs. The text of the act says: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” Alien refers to any “non-US national”. Tort is defined as “damage, injury, or a wrongful act done wilfully, negligently, or in circumstances involving strict liability, for which a civil suit can be brought.”

programme at Northwestern University’s school of law. “This will finally give the plaintiffs their day in court … It also calls on Shell to account for its actions in front of a court. That in itself is significant,” she says. From a reputational perspective, Shell is entering dangerous ground. Reporters will be waiting with pens poised as Shell’s

defence lawyers answer awkward questions about, say, the company’s precise relationship with Nigeria’s military government or the presence of armed government forces on its facilities. Already environmentalists are using the case for publicity purposes. Under the ShellGuilty Campaign, an international coalition of activist groups is calling on Shell to

What Shell says Shell would not respond directly to questions about the case. The company said in a statement: “The allegations made in the complaints against Royal Dutch Shell concerning the 1995 executions of Ken SaroWiwa and his eight fellow Ogonis are false and without merit. Shell in no way encouraged or advocated any act of violence against them or their fellow Ogonis. We believe that the evidence will show clearly that Shell was not responsible for these tragic events.

“The executions in 1995 of Ken Saro-Wiwa and his eight fellow Ogonis were tragic events that were carried out by the Nigerian government in power at the time. “Shell attempted to persuade that government to grant clemency; to our deep regret, that appeal – and the appeals of many others – went unheard, and we were shocked and saddened when we heard the news. “Shell remains committed to reconciliation, peace and return to normality in Ogoniland.”

explain its continued use of gas flaring in Nigeria – a topic not even addressed directly by the case. “There’s a real cost for companies of having these cases heard at all. Not just the legal costs, but the reputational costs and the fact that there will be a lot of material in the public domain that could possibly be used against them,” says Peter Frankental, economic relations programme director at Amnesty International UK. Certainly, a Shell victory will send a sigh of relief through corporate legal departments. But it would be pre-emptory to interpret such an outcome as the death knell for the ATCA, Arimond argues. “If Shell wins, it means that in this particular case the plaintiffs were not able to muster enough evidence … [but] these cases are going to be continued to be brought,” she says. Naturally, a win for the plaintiffs would jettison the case into genuine landmark territory. A verdict against Shell would mark the first time a company has been held liable in the US for human rights abuses that occurred in a foreign jurisdiction. That’s the stuff of litigation history. Potent precedent Before trial, few legal experts would predict on which side the jury would fall. On a positive note, most at least expect a verdict. If Shell was going to settle out of court, the argument runs, it would have done so already. Conjecture about the implications of the case should Shell lose is rife. For the company itself, there is the question of

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number of international civil liabilities claims under ordinary tort law. In 2003, for example, it recovered damages worth £10.5m against UK-based mining company Cape for causing asbestosis in South Africa. The arguments for adopting ATCA-style legislation beyond the US are growing, according to Steve Kretzmann, executive director of campaign group Oil Change International. He says: “The double standards that exist today are not acceptable in today’s world. It’s not okay to value Nigerian life or Ecuadorian life less than American life or British life.” FoE’s De Clerck agrees. Shell’s defeat would send a “clear signal” to lawmakers in the European Union, he argues. Last year, the Coalition for Corporate Justice, a group of civil society organisations that includes FoE, submitted a legislative proposal on the lines of the ATCA to the European commission.

Corporate reputation needing a top up?

damages. A guilty verdict would leave Shell facing a fine that could easily run into millions of dollars. While the possibility of appeal exists, jury-decided cases are difficult to overturn. As for the reputational damage, a loss does not bear thinking about. The impact will also be felt at the general corporate level. US-domiciled companies operating in any overseas territory will suddenly face the prospect of being held to account “at home”, says Simons of EarthRights International. “That’s the message we want to send to corporate boardrooms: just because they’re not in the US, they’re not above the law,” he says. A guilty verdict would also alert potential litigants. What has so far remained a trickle of cases could potentially turn into a flood. “It would show to affected communities in developing countries that this [the ATCA] is a clear way to go – that they can take a company to court in its home country,” argues Paul de Clerck, corporate campaigner at Friends of the Earth International (FoE). Another possible impact could be to internationalise the ATCA. Litigators outside the US are already experimenting with similar cases. In France, for example, attempts are being made to sue energy company Total for

human rights offences during the construction of a gas pipeline in Burma. In the UK, meanwhile, the public interest law firm Leigh Day & Co has pursued a

Remediation and reconciliation in the Niger delta Over the past 10 years, Shell has introduced new practices, technology and environmental management systems designed to “largely prevent” long-term impacts in the areas of its Nigerian operations. The company has a remediation programme in place that commits to rehabilitate land degraded by oil operations and spills to environmentally acceptable conditions. In 2007, the company completed the clean up of 61 out of 74 outstanding sites. Local communities refused access to eight of the remaining sites. Work continues on the final five. Shell supports measures to bring about reconciliation with the Ogoni people, but says it is “is a delicate process, and one that cannot be rushed”. The company suspended its activities in the region in 1993 after three and a half decades of operations. Shell states that it welcomes the Nigerian president’s appointment of a facilitator to mediate the reconciliation process with the Ogoni people. It maintains that resuming oil production in Ogoniland is dependant on the support of all Ogonis.

Ideal outcome Speculation surrounds the legal implications of the Shell case. But what could it mean for corporate practice? One immediate issue revolves around “wilful ignorance”. A recent report by the United Nations Human Rights Council finds evidence of lawyers advising companies not to undertake human rights risk assessments. Knowing about potential risks, they argue, could increase the companies’ future liability. A judgment against Shell would rubbish such advice and force a “proactive approach” from companies, according to Amnesty’s Frankental. “The whole balance of liability would change and there would be an overwhelming case for companies to do much greater due diligence on human rights,” he says. Greater legal scrutiny will also force companies with existing internal controls to ensure that these are robust. Standardised due diligence procedures will no longer suffice, says Hastings College’s RohtArriaza. They must be industry-specific. “The ideal outcome would be … for companies to start pre-empting legislation. You would end up with fewer cases because corporations would be doing a better job at policing themselves,” Roht-Arriaza says. The legal teams in the Shell v Saro-Wiwa suit are due to wrap up their arguments on June 19. The case’s repercussions will inevitably serve to shape the future of international corporate accountability. Just how much, however, depends on the jury’s verdict. I