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Financial Times

US appeals court hears Unocal human rights case.  By Patti Waldmeir in Washington. Jun 18, 2003.

A US appeals court yesterday heard arguments in what could prove a landmark case testing whether and how multinational companies can be sued in the US for human rights abuses that occur overseas.

The long-running case involves the operations of Unocal, the oil company, in Burma.

Unocal is being sued under an obscure 1789 law, the Alien Tort Claims Act, which is increasingly being used against multinational corporations alleging complicity in human rights abuses overseas.

The Unocal case is an important test of corporate responsibility in an age of globalisation, and could have a big impact on other such cases, including the recent highly publicised lawsuits against multinationals claiming damages for their involvement in apartheid South Africa.

The decision of the 9th circuit US court of appeals, which heard the case yesterday in San Francisco, is being closely watched by those who wish to open this new legal front in the war against globalisation, as well as by those who fear that such litigation could damage America's relations with the world, and prove very costly for multinational corporations.

The Unocal case claims that the oil company turned a blind eye to torture, rape, forced labour and other atrocities by the Burma military during construction of a natural gas pipeline partially funded by the oil company.

The case has generated heated debate between human rights groups and the business community. The US government has weighed in on the side of business.

The State Department has asked the court to throw out the case.

The Department of Justice submitted a brief arguing that there was no legal basis for such claims under the 1789 act.

In 2000 a district judge ruled in favour of Unocal, saying that plaintiffs failed to prove it controlled the Burma military or actively participated in abuses.

However, a three-judge panel of the 9th circuit overturned that ruling, saying that the case should be allowed to go to trial.

Yesterday a larger 11-judge panel heard the case.