Supreme Court to Weigh Corporate Liability for Oppression Overseas

(Reuters) - 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.

NO EXEMPTION FOR GENOCIDE

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 Alien Tort Statute from 1789 states that U.S. courts shall have jurisdiction over any civil lawsuit by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.

In its first substantive look at the law in 2004, the Supreme Court ruled it can be used for certain well-established international law violations, but did not determine who may be held liable.

A ruling in the case is expected by the end of June.

The Supreme Court case is Esther Kiobel v. Royal Dutch Petroleum Co, No. 10-1491.

(Reporting By James Vicini; editing by Kevin Drawbaugh and Todd Eastham)