Ethics Matters: Suits endanger U.S. foreign policy, relations

Passed by Congress in 1789 to address piracy, the Alien Tort Claims Act was “unused” for more than 200 years. The act received new life when class action plaintiff lawyers started using it to sue U.S. businesses for human rights abuses in foreign countries. Is the act’s use ethical, however, since lawsuits filed under it endanger U.S. foreign policy and international relations?

Impact on foreign relations

Massive litigation cases filed under the act anger foreign governments. They resent U.S. courts passing judgment on acts occurring within their borders involving their citizens and often consider such lawsuits proof of U.S. imperialism.

One case sought reparations from Japan for crimes committed in World War II. Although a U.S. court dismissed the case, its filing endangered delicate negotiations about the same issue between Japan and China. The lawsuit dismayed the U.S. government, which encouraged the two nations to resolve long-standing grievances from the war.

Plaintiffs sued the Caterpillar Co. for damages after Israeli defense forces used Caterpillar equipment to destroy buildings in Palestine. The case challenged Israel’s defensive actions in a sensitive and volatile region with critical U.S. interests. Fortunately, a federal district court dismissed the case before it caused international problems.

Supreme Court ruling

In May 2008, the U.S. Supreme Court affirmed a lower court ruling permitting lawsuits under the act against multinational companies for aiding South Africa’s former apartheid policy. The Supreme Court automatically affirmed the lower court ruling when it refused to hear 11 consolidated cases against 50 international companies that did business in South Africa during apartheid. The consolidated cases seek $400 billion in damages for all those injured by South Africa’s apartheid policy 1948–1994.

The consolidated cases name as defendants such U.S. companies as IBM, General Motors, Ford, ExxonMobil, Bristol-Myers Squibb, Hewlett-Packard, Coca-Cola and Citigroup.

The Supreme Court refused to hear the case because four of the justices held stock in some of the defendant companies and could not take part in deliberations involving those companies.

The case against U.S. companies who did business in South Africa during the apartheid era asks a U.S. court to pass judgment on past U.S. foreign policy. The U.S. government encouraged U.S. companies to do business in South Africa during apartheid as part of the U.S policy of “constructive engagement.” Rightly or wrongly, the U.S. government feared isolating South Africa would prolong apartheid. It sought to persuade South Africa to abandon its apartheid policy and believed financial ties to South Africa would help.

The wisdom of the U.S. response to South Africa’s policy of apartheid is a matter for historians to debate and not the U.S. courts. It is unfair to punish U.S. businesses for doing business in South Africa when the U.S. government encouraged them to do so.

Congress should repeal the Alien Tort Claims Act before it further financially damages U .S. businesses and causes greater mischief in U.S. foreign relations.

John D. Copeland, J.D., LL.M., Ed.D., is an executive in residence at The Soderquist Center for Leadership and Ethics and professor of business at John Brown University in Arkansas.[[In-content Ad]]