Prague, 24 March 2005 (RFE/RL) -- The case against Unocal Corporation alleged that the company knew or should have known that the Myanmar army committed human rights abuses while providing security and clearing a jungle path for the 1.2-billion-dollar pipeline project.
The suit was filed in 1996 in a Los Angeles court on behalf of 15 Burmese villagers who are now in hiding, living under fictitious names for fear of reprisals.
Unocal has always denied it knew anything about the alleged abuse.
But this week, the California firm and lawyers representing the plaintiffs announced they had reached an out-of-court settlement in which Unocal will compensate the villagers for their suffering.
Bama Athreya is deputy director of the public interest legal group representing the villagers, the Washington-based International Labor Rights Fund.
"The fact that [the case] was certified by a court, accepted by a court, was extremely significant," Athreya says. "The fact that we have now come to the end of it is extremely significant in terms of actually making that broader point -- that corporations ought to be accountable, no matter where in the world they are doing business, for basic violations of human rights. And we're talking about, in the Unocal case, forced labor, slavery."
The exact terms of the settlement won't be divulged until early April. But reports say Unocal is likely to pay millions of dollars to help improve the lives of residents in the affected regions of Myanmar.
Unocal is among the world's top natural gas and oil exploration and production firms. Its main activities are in Asia and North America.
It also explored the possibility of building a pipeline across Afghanistan under the Taliban during the 1990s, when Afghan-born American diplomat Zalmay Khalilzad carried out risk assessments for Unocal. The company now says it has no interest in similar projects in Afghanistan.
The Burma case has long been a public relations nightmare for the company, and some commentators have suggested that it may have settled to avoid a trial likely to intensify the negative publicity.
But Unocal is far from alone.
Its case was simply the furthest along of more than 30 similar cases pending in the American courts that accuse U.S.-based multinational corporations for complicity in crimes that took place in other countries.
Among the cases, Coca-Cola is accused of allowing the murder and torture of union leaders at a bottling plant in Colombia; Exxon Mobil allegedly ignored human rights violations by the military at its Indonesian operation; and Del Monte, a food concern, is accused of using thugs to torture leaders of the banana workers' unions in Guatemala.
Athreya says the Unocal case's outcome was being closely watched around the world because it could have an effect on the future conduct of multinationals everywhere.
"We're talking about torture, we're talking about aiding and abetting assassination of trade union leaders," Athreya says. "These are fundamental crimes against humanity. And it's been very, very difficult to bring cases in the countries where the violations have been committed because rule of law is weak, because we're talking about very brutal military regimes that would, in effect, silence anyone who brought a case forward in those particular contexts. And if we can bring those cases in the United States, I think it would have a tremendous effect in terms of improving corporate behavior around the world."
Athreya adds that a similar case is also pending in France against French firm Total, which was a partner on the Myanmar project.
"I think this [Unocal case], as well as some other cases that are still in the courts, are definitely setting out parameters for the conduct of companies abroad, especially if they have a U.S. presence." -- Arvind Ganesan, Human Rights Watch
The Unocal case, and the others like it, have been brought to court under a U.S. law that was passed in 1789, the Alien Tort Claims Act (ACTA). ACTA allows foreigners to sue in U.S. courts for alleged violations by U.S. individuals or companies of international norms on crimes such as genocide, slavery, and torture -- provided they could not expect a fair trial in their home country.
In recent years, many multinational corporations have responded to the growing concern for human rights worldwide by adopting internal codes of conduct to govern their affairs in developing countries.
For example, Gap Incorporated, a U.S. clothing retailer, forbids its foreign suppliers from using "prison, indentured, or forced labor."
"I think this [Unocal case], as well as some other cases that are still in the courts, are definitely setting out parameters for the conduct of companies abroad, especially if they have a U.S. presence," says Arvind Ganesan, who tracks corporate human rights issues for the organization Human Rights Watch in Washington. "So the terms of the settlement are critical because it will set a certain baseline for what is acceptable or unacceptable conduct. And it will only help in that respect to ensure that companies act responsibly when they go abroad."
Still, international business leaders view the cases against multinationals with concern and say America's courts have no business trying crimes committed outside the United States.
Thomas Niles is president of the United States Council for International Business, which promotes the global interests of American business. He argues that enforcing human rights is the responsibility of governments. And he says in most of the cases pending in U.S. courts, multinationals were "innocent bystanders" to alleged crimes committed by host governments.
Niles says multinationals bring needed investment to developing countries, but that they will lose interest in such projects if faced with growing litigation:
"Well, it would certainly be extremely costly in terms of the readiness of corporations to invest in developing countries, where the legal systems, the level of governance, might not be every thing you expect in Western Europe or North America," he says. "So if we're interested, as we are, in encouraging development in the Third World, one of the ways not to achieve that is to discourage direct foreign investment. So that's the risk."
Rights groups, meanwhile, await the fate of the other cases pending in American courts. But much depends on whether U.S. lawmakers move to repeal the law that has allowed the cases to be filed.
The administration of U.S. President George W. Bush repeatedly urged the courts not to apply the Alien Tort Claims Act in the case against Unocal.
But in a decision cheered by many in the developing world, America's courts have so far ruled otherwise.