A case in the California state court brought by 15 Myanmar villagers could lead to a shake-up in the rules governing multinational companies operating in underdeveloped democracies
This column has noted many times the close of an era called Globalism I and the gradual emergence of another, better-managed process called Globalism II.
A California state court is about to hear a case where 15 Myanmar villagers claim their human rights were abused while working on a Unocal venture. The Unocal case may drag on for who knows how long but already has the whiff of a relic about it. Claims of forced labour? Burmese soldiers kidnapping workers and raping some of them along the way? What century is this?
Late in the last one, it turns out. A venture comprised of Unocal, Total of France, now part of Total Fina Elf, the Petroleum Authority of Thailand and the Myanmar military government began work on the Yadana natural gas pipeline in 1993. The $1.2bn project was completed five years later. It carries gas from the Yadana offshore field to the Thai coast.
The suit was filed in 1996 by the International Labor Rights Foundation, a Washington group founded in 1986, on behalf of the villagers that lived near the project. United Nations organisations and other human-rights groups have since said conditions on the project for those doing unskilled work in the early phases were something near to slave labour.
There's another aspect of this you ought to know about. In addition to the California case, the Labor Rights Foundation is appealing a federal ruling late last year that dismissed as invalid the argument that Unocal, while it didn't hold the guns, aided and abetted the forces of the State Law and Order Committee (SLORC), as the Myanmar military attractively terms itself.
The legalities are surprisingly uncomplicated for such a case. Documents cited by a California judge at an earlier stage in the proceedings indicate Unocal had knowledge of the local military's misdeeds but the company denies willful complicity. The case turns on whether that's enough to relieve the firm of responsibility. Unocal maintains its innocence.
'We're optimistic about this case and the federal appeal,'' Terry Collingsworth, lead lawyer for the Labor Rights Foundation, says. 'The legal question is fairly simple. Since Nuremberg, courts have accepted that aiding and abetting is enough to hold a company liable.''
We'll have to await and see about all that. The federal judgment on the Labor group's appeal is a bit overdue. In the California case, Unocal has asked the court to seek the state department's opinion as to whether the lawsuit raises security issues in the context of the war on terrorism. That opinion will not bind the judge.
This is not the only case like this, as readers of this column may recall. Since last year, Collingsworth has also had a suit pending against ExxonMobil for its alleged complicity in human-rights abuses in Indonesia's Aceh province, where the world's largest oil company has been operating a gas field. That case also awaits a state department opinion, this time requested by the judge.
The essential issue at stake in all this is larger than either Unocal or ExxonMobil. It's about regulation: how to regulate the behaviour of multinational companies around the world, in particular in countries such as Myanmar, where legal systems and democratic process are underdeveloped.
This is key to the transition from Globalism I to the newer, not-yet-arrived variety. 'Companies have had a long period of gray,'' Collingsworth says, 'during which they had the benefits of protection for their projects without any corresponding standard of responsibility applied to their conduct.'
When I spoke to Collingsworth a year ago about the ExxonMobil case, he was optimistic or pessimistic about progress in this direction, depending on your sense of time. 'We're a generation away from a balanced global regulatory system,'' he said then, 'with equity and labour rights a norm.'
What's the thought now, then? I couldn't help but wonder if the speed of the Unocal case had changed his mind. Collingsworth pointed to a simultaneous European action against Total under newly-implemented regulations in Brussels.
'What you're going to see is a smorgasbord of initiatives like ours that will force governments and corporations to conclude we're all better off with standard rules of behaviour.'' he says.
Isn't that the point? We'll all be better off once we make the transition from Globalism I, which was all about deregulation and less government, to a more sensible, less ideological approach to the kind of questions raised by two oil majors operating in somewhat lawless regions of the developing world.
The only alternative conclusion is that a lot of companies don't mind spending a lot of money on attorneys, a lot of time in court and having their names, reputations, and even stock prices lessened as allegations of misbehaviour circulate in public.
Bloomberg newsroom, Washington
Three funds to watch