“State and Enterprise Responsibility for Civil and Environmental Risks”
By Harald Koch, Berlin/Hamburg
What has the Agent Orange disaster of the 1960s in Vietnam left behind, other than the terrible health effects suffered by innocents and persistent ecological damages?
Are there lessons to be learned from the way the legal system handles such man-made disasters, from the way relief was sought and granted to victims in Vietnam, the US, and other countries? Given that many environmental disasters today have international repercussions, is transborder litigation the means to achieve “global justice”? And how can we ensure the accountability of corporations and government institutions that are responsible for wide-spread health injuries and environmental damages?
Within this framework, three issues were addressed during a conference on Agent Orange organized by the RCC in Tutzing last year; they will be illustrated here using case studies involving international environmental and human rights damages.
(1) Strategic litigation
In Essen, Germany, a Peruvian farmer is suing the German company RWE, one of the world’s biggest public utilities, for its contribution to the climate change that is causing glacier melting and threatening his home, family, and livelihood. The volume of water in the glacial lake above his town has grown enormously in the last several decades and the moraines damming the lake are threatening to burst and release a flood. Saúl Luciano Lliuya has asked the German courts to require RWE to take responsibility for a share of the costs of protective measures. Although the immediate cause of this hazard is the increasing global surface temperatures and the consequent melting of the Andes glaciers, Luciano Lliuya argues that RWE’s greenhouse emissions are a key contributor to this event—RWE is the largest greenhouse gas pollutant in Europe, contributing to 0.45 percent of global CO2 emissions. The case has been widely reported in the media, garnering much sympathy for Luciano Lliuya and his plight.
Of course, RWE cannot be held fully and solely responsible for climate change in the world. But the lawsuit is an important example of strategic litigation—carefully selected court cases that can serve as a test case (legal action whose purpose is to set a precedent) for putting key, collective problems on the legal agenda. If these individual claims are successful, they can set an important precedent for many other similar cases, as well as raise public awareness of the issue. Luciano Lliuya’s suit against RWE poses a larger question of whether companies can be held liable for their role in indirect and international environmental damages such as climate change.
Thus, transborder prosecution of claims may have a strategic function as far as it aims to denounce certain human rights infringements, or ecological hazards that extend beyond private and individual grievances. Seeking collective redress enables representatives of aggrieved parties to make use of economies of scale and to arouse (international) public attention—which in turn is apt to sensitize government and industry towards economic compensation for respective harms. Even individual litigants try to make use of procedural instruments such as test litigation, which can put pressure on business and government to comply with political, ecological, and ethical standards.
(2) Functions of tort liability
KIK, a well-known supplier of cheap textiles in the European clothing industry, uses subcontractors across the globe to produce its textiles. One of these runs a factory in Karatchi/Pakistan, where until 2012, the production of KIK textiles accounted for nearly 100 percent of the Karatchi factory’s output. In September 2012 the factory completely burned down—out of more than 1,000 workers in the building, some 260 were killed and many were injured. The cause of these casualties? Presumably, the factory’s barred doors and windows, a total lack of emergency exits and alarm devices, and ineffective fire brigades. The plaintiffs are holding KIK-Germany liable under Pakistani law as a quasi-employer for its negligence in monitoring and enforcing the necessary safety measures. The four victims who brought the test case before the court asked for non-material damages only, which KIK has so far refused. Ironically, prior to the case, KIK had committed itself to work health and safety as part of its social responsibility program. In fact, their Corporate Code of Conduct stipulated that internal auditors would be required to monitor working conditions frequently.
This Pakistan-German dispute is a typical tort claim—a lawsuit brought in order to seek compensation for a civil (rather than criminal) wrong or injury, for example as a result of negligence, as in the KIK case. In most legal systems, traditional tort law emphasizes the compensatory functions of civil liability. However, when several claims are collectively prosecuted on the basis of rights infringement, emphasis shifts to prevention and deterrence. In this case, tort law primarily focuses on the tortfeasor (the person or entity responsible for causing damage), aiming to influence their behavior and so prevent them from committing future offences.
The transborder nature of this particular case raises an interesting question: can imposing multiple liability on a foreign corporate tortfeasor have a preventive effect, or is this the respective state’s responsibility? An important aspect of prevention and deterrence involves improving existing security management, safety standards, and health and labor conditions. The vast majority of businesses in both the corporate and industrial sectors already engage in risk management control, either in the form of insurance coverage or avoiding losses by anticipating the costs of achieving optimal security levels. This shows that liability is as much about compensating past injuries as it is about prevention and deterrence.
(3) Government responsibility and jurisdiction
The examples explored thus far look at cases where corporations are held responsible for damages. However, what happens when governments engage in or sponsor wrongdoing? Recent history provides many examples of state-enabled injustice, either resulting from direct state action (e.g. human rights violations by government officials) or indirect, state-caused grievances (like the licensing of injurious activities, or ordering products with unwanted “side effects” for military use).
Most prominent, perhaps, is the case of Agent Orange, a herbicide and defoliant sprayed over large areas of Vietnam by the US military during the Vietnam War. This toxic chemical lingers in the environment, causing illnesses, birth defects, and cancer in those exposed. Both US veterans of the war and Vietnamese citizens have sought compensation for damages. But holding governments responsible is tricky: In most countries government activities are regarded as “acts of state” and as a result governments are generally shielded from private lawsuits. Consequently, even private enterprises in the US may plead the “government contractor defense” if they have manufactured dangerous products at the government’s request. The situation is slightly different under European product liability law, which is more inclined to favor the victim.
In the Agent Orange litigation against the US government and the chemical industry, the US courts denied all actions against government and industry because they resulted from military engagement. In spite of this, US veterans who suffered from dioxin exposure in the Vietnam War—many of whom died or were totally disabled—have managed to win a comprehensive settlement of several hundred million dollars from the chemical industry.
Another conceivable hurdle on the road to justice in transborder cases of human rights violations and mass injuries is the question of jurisdiction. What national or international court is authorized to hear a case in which multiple countries are involved? And how is the judgment to be enforced? The rules of jurisdiction are very much influenced by policy considerations in the administration of justice. Generally speaking, jurisdiction is established according to the degree to which the forum country (the country where the case is filed) is affected and whether or not the minimum contacts of the forum state have been met. For example, in many countries, a court will refuse to take a case if it doesn’t have a stake in the dispute or if the case has no contacts within that country—but what constitutes a relevant contact varies greatly from place to place.
The never-ending (legal) saga of Texaco’s oil exploitation in the Ecuadorian Amazon illustrates some of the challenges of such lawsuits. Texaco’s release of huge amounts of toxic waste into the rainforest and waterways of Ecuador resulted in extensive damage to the land and its people. When a group of some thousand affected residents brought a suit against Texaco at its headquarters in New York, the District Court dismissed the case on the grounds that “it has everything to do with Ecuador and nothing with the US!” The plaintiffs then turned to the Ecuadorian courts where, after several years of complicated litigation, their suit was successful and they were awarded several billion US dollars. But Texaco/Chevron refused to pay—and the Ecuadorian judgment could not be enforced in the US following accusations of corruption in the Ecuadorian judiciary.
(4) Consequences of liability
Having established a violation of the law in a case of massive injury, the next challenge is to determine the appropriate legal instrument to enforce the rule of law:
Is it a human rights complaint to an international tribunal?
Is it criminal prosecution?
Is it civil liability?
Reviewing various American, European, and Asian legal systems reveals differences in the consequences of liability and the remedies available. This is due to the very different historical experiences of these countries regarding restitution and compensation of grave injustices. That is why, for the victims and their representatives, it is crucial to find a competent court that both has jurisdiction and applies the law favorably to claimants.
Not only does this highlight the importance of the rules of jurisdiction and private international law in our context, it also shows that they are more than just a formality. A careful analysis of their functions reveals their far-reaching substantive and political effects—a highly beneficial contribution to the international debate on sustainable indemnification and historical justice.
Harald Koch is the Senior Chair of International Private and Procedural Law and Comparative Law at the Humboldt University of Berlin.