Further comment from the Financial Times...

Further comment from the Financial Times...

Source: Financial Times, London, August 9 2002

Unocal, the US oil company, told a California court yesterday that American foreign policy interests could be harmed by a lawsuit that alleges the company used forced labour in Burma.

The move comes just days after the US government warned a Washington DC court that a pending lawsuit against Exxon Mobil over alleged abuses in Indonesia would hinder the war on terrorism and jeopardise foreign investment in a key ally.

Unocal lawyers asked the court to seek a similar State Department opinion, saying that many of the arguments in the Exxon case were "equally applicable" to its case. By seeking to penalise a US company investing in a country with a record of human rights abuses, the litigation could "have a chilling effect on investment and efforts to induce the home country to improve human rights", Unocal said in its submission to the court.

The Unocal request has raised new fears among human rights groups that the State Department's actions in the Exxon case could quash further efforts to use domestic courts to sue US companies over alleged abuses in their overseas operations.

The Unocal lawsuit, filed on behalf of Burmese villagers, alleges the company used forced labour in the construction of a pipeline. Unocal has denied the charges.

The case is set to go to trial this autumn, the first of about a dozen similar cases to reach that stage.

But the State Department's intervention in the Exxon case has raised serious questions about whether Washington will now systematically try to discourage the courts from trying US companies over abuses abroad. Human rights groups say the State Department's action contrasts sharply with commitments it made in December 2000, when it launched an initiative aimed at ending human rights abuses by security forces protecting oil and mining companies in the developing world. The Exxon lawsuit, which alleges that Indonesian security forces hired by the company were responsible for murder, torture and rape in the 1990s, was one of several high-profile cases that the joint US-UK initiative was aimed at addressing.

"It is the height of hypocrisy for the State Department to publicly promote principles for the oil and gas industry and then tell a judge that the scrutiny of an oil company's human rights record runs counter to foreign policy," said Kenneth Roth, executive director of Human Rights Watch.

The State Department letter came after a heated debate inside the agency, with its human rights bureau arguing that US intervention in the case would mar US credibility on issues of corporate social responsibility. But other officials are worried that the spate of court cases is angering US allies and interfering with the government's foreign policy authority.

The cases have been filed under a 200-year-old law called the Alien Tort Claims Act, which has been interpreted by some US courts to allow lawsuits if US companies violate international laws abroad.

The department's legal affairs office, headed by William Howard Taft IV, "saw an irresistible opportunity to strike a blow against the Alien Tort Claims Act," said a former State Department official.