Apartheid lawsuit passes another hurdle

Apartheid lawsuit passes another hurdle Picture: THINKSTOCK

THAT the South African media barely noticed a decision of a federal court in New York on April 17 is hardly surprising. Not only were we mesmerised by quite different proceedings in Pretoria, but our fifth democratic elections are imminent.

Yet the judgment is a momentous one for South Africans claiming civil damages for injuries suffered under the apartheid regime. What is more, together with other class actions wending their way through the federal courts, the decision may change the way multinationals around the world do business.

The defendants are two US corporations, IBM and Ford, which operated in apartheid South Africa in defiance of United Nations sanctions. The plaintiffs allege that IBM provided custom-made software to facilitate racial population registration, making itself an accomplice to the international crime of denationalisation. Ford is alleged to have supplied the state with armoured vehicles.

The case is based on the Alien Tort Statute (ATS), a unique law that grants US federal courts civil jurisdiction over those implicated in the violation of fundamental human rights anywhere. In a recent case, a court refused to dismiss a suit seeking damages against a Massachusetts anti-gay campaigner who worked with the Ugandan government and churches to target homosexuals. Claimants have invoked the ATS to sue arms, mining, and oil-company multinationals that collaborated with regimes in Serbia, Indonesia and Sudan. The pharmaceutical giant Pfizer paid millions to the families of Nigerian children killed in trials of meningitis medicine without informed consent.

Multinationals protest they should not be saddled with responsibility for atrocities committed by regimes against their own citizens in countries in which they happen to do business. But US courts have followed Nuremberg precedents and those of international tribunals for Yugoslavia and Rwanda in holding that secondary liability may be imposed upon corporations for facilitating human rights abuses abroad — if it can be proved that corporations knowingly provided practical assistance to the actions of repressive governments.

Human rights activists hope the ATS will cause multinationals to add a human rights audit to their due diligence checklists. That is no longer just a pipe dream. Pension funds have threatened to sell stock in corporations that do business in notoriously repressive environments. Company boards that pay lip service to corporate social responsibility now have reason to consider potential blow-back from their amoral investments in countries with terrible human rights records.

Last month's decision in New York allowing the apartheid case to go forward came as a surprise to commentators who assumed that a binding Supreme Court decision handed down last year dismissing claims against Royal Dutch Shell for repression in Nigeria sounded the death knell for the apartheid suit as well. But the New York court held that there was nothing to stop the ATS applying to a foreign claim — provided that claim materially "touches and affects" US interests. The fact that IBM and Ford (unlike initial defendants such as Barclays, Daimler and Fujitsu), are US companies, makes it easier to satisfy this test.

The apartheid litigation has overcome political hurdles. Former president Thabo Mbeki adamantly opposed it, saying it amounted to US judicial imperialism that interfered with our truth and reconciliation process. But, after 2009, the government lent cautious support to the litigation. It helped also that the Obama administration softened former president George Bush's opposition to the suit.

Last month's decision will be appealed against. Ford and IBM will invoke recent decisions suggesting that corporations cannot be subject to the ATS in the first place. Assuming they survive the appeal, plaintiffs will need to present evidence of a close connection between the claims and wrongful conduct that took place upon US soil. Moreover, plaintiffs will need to overcome the presumption of corporate separateness to hold foreign parent companies responsible for misdeeds of their South African subsidiaries. They must make at least a prima facie showing that decisions made in the US gave rise directly to injuries suffered in South Africa.

The appeals process will be protracted, and it may be years before a jury is empanelled. The odds are that the litigation will be continuing when our sixth democratic elections roll around.

• Osborne represents the Ntsebeza plaintiffs in the apartheid litigation in his capacity as a New York attorney.

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