Trial Lawyers Could Stymie Rebuilding of Iraq
Companies that could help rebuild Iraq are wary of making a
commitment for fear of a 214-year-old law that trial lawyers have
dusted off to sue Americans firms in U.S. courts.
Officials with a wide variety of construction, transportation,
energy and retail firms say that pending court cases and lack of
congressional action in rescinding the law give them pause about
taking part in the economic revival of a post-war Iraq.
Known as the Alien Tort Claims Act of 1789, the law was intended to
allow foreign citizens to sue to recover property seized by pirates
when they attempted to dispose of stolen booty in American
With the end of piracy on the high seas, the law lay dormant for
nearly two centuries.
Congresses never bothered to repeal it and, eventually, the federal
government forgot about it.
A few years ago, though, anti-globalization groups revived it. They
saw it as a vehicle for suing U.S. companies that do business in
foreign nations accused of human rights abuses against terrorists
and guerilla groups.
The Center for Constitutional Rights (CCR), an organization founded
by radical anti-war activist William Kunstler in 1966, promoted it
as a way to haul American corporations into federal courts and hold
them responsible for alleged human rights abuses that occur in
nations where they happen to do business.
The rub for American businesses: How do you participate in
rebuilding a country like Iraq if anything you do using Iraqis in
your work force might be interpreted by some federal judge here in
America as a "human rights" violation?
U.S. and foreign companies well equipped to help rebuild Iraq's
infrastructure are calculating the lawsuit risk. For example,
companies that made the cruise missiles or the tanks or the planes
whose weapons may have inadvertently killed Iraqi citizens could be
hauled into court under the Alien Tort Claims Act.
It's not too far-fetched to suggest that a company could be forced
to defend itself in a federal court for making the desert
camouflage uniforms worn by coalition forces.
That's how open-ended ATCA is, according to current interpretation.
Simply put, it requires American firms doing business overseas to
meet amorphous "human rights" standards in which the wrongdoing of
the country's government is attributed to them. It's a prime
example of guilt by association.
The CCR's touting of the Alien Tort Claims Act as a prime means of
harassing U.S. multinational companies already has succeeded on a
number of fronts.
More than 100 U.S. businesses are being sued for their investments
and business activities in South Africa during the apartheid era.
Ironically, virtually all of them were signatories of the Sullivan
Principles, which led to equal pay and equal conditions in the
workplace for black South Africans, and is widely credited with
hastening the arrival of majority rule.
The lawsuit, which seeks tens of billions of dollars in damages, is
considered a major disincentive to the foreign investments a
struggling South Africa needs so desperately these days.
And dozens of other U.S. companies are being hauled into U.S.
courts under ATCA because they do business in countries whose
governments often are engaged in brutal warfare against ruthless
guerilla movements. Among them: Colombia, Burma, Indonesia,
Nigeria, Sudan, Malaysia and Peru. Businesses in other countries,
such as China, are likely the next targets.
Few foreign companies are willing to locate a plant or office in
such a country, if they're likely to be sued because of an alleged
human rights abuse by the host government. Indeed, many cases
brought in U.S. courts under ATCA relate to the use of force
against people who are actually breaking local laws -- even though
such laws may be inconsistent with American concepts of
The State Department last year issued a public statement warning
that such lawsuits "could potentially disrupt" the fight against
terrorism, as well as undermine a developing nation's economic
stability by spooking foreign investors.
"The issue is vicarious liability," notes Daniel O'Flaherty, vice
president of the New York-based National Foreign Trade Council,
which represents U.S. exporters.
Personal injury lawyers filing claims on behalf of foreign
nationals in U.S. courts make the argument that U.S. companies were
there, paid taxes and profited from police protection. Ergo, they
are vicariously liable. "We are concerned about the proliferation
of lawsuits against U.S. companies for behavior over which they
have no control," O'Flaherty said.
Thomas Niles, president of the U.S. Council of International
Business, said the lawsuit against the American firms who did
business in South Africa is "grossly unfair."
He points out that the U.S. government encouraged American
companies to do business with South Africa ... to engage
constructively and undermine apartheid within by signing the
Sullivan Principles to provide equal treatment to black
He's right. A new breed of voracious plaintiff's lawyers with
little concern about human rights is seeking to grab huge
settlements from American companies with ultra-deep pockets for
acts they never committed.
The ATCA lawsuits are proliferating at a time when the United
States is waging all-out war on the forces of terror and struggling
to revitalize a sluggish economy. Now they may preclude companies
from the great task of converting Iraq from a trickle-down
thugocracy to a free-market democracy.
It's time Congress put an end to this latest quest for jackpot
justice by doing something it should have done shortly after the
turn of the 19th century: Rescind the Alien Tort Claims of Act of
1789. American businesses are not pirates.
Paul Rosenzweig is a senior fellow of the Center for
Legal and Judicial Studies at The Heritage Foundation
Distibuted nationally on the Knight-Ridder Tribune wire