Reprinted from CSRWire Talkbalk
Sometime later this year or early next, lawyers for Swedish mining giant Boliden will head to court in northern Sweden to square off with lawyers for over 700 community members from Arica, Chile.
A Clean-up Gone Wrong
The dispute concerns some 20,000 tons of arsenic-laden smelting waste that Boliden off-loaded in the mid-1980s to an inexperienced Chilean enterprise that claimed it could “process” the waste, but in fact just dumped it on the outskirts of town. Boliden claims the dumping wasn’t its fault; the Chileans say Boliden was negligent.
The lawsuit is a vindication of the affected Arica community’s decades of effort to demand justice, but at the same time presents them with new uncertainties: a jurisdictionally complex case, a new round of legal costs (albeit to be borne by the lawyers), the prospect of lengthy appeals, and litigation’s well-deserved reputation for driving even the most embattled parties farther apart.
Boliden, which in its latest Annual Report talks about wanting to “highlight the positive role that a responsible mining industry plays in society,” can’t be looking forward to the spectacle either.
What Happened to Negotiation?
Indeed, no sane business wants litigation—especially litigation involving alleged human rights and environmental abuses. That’s why CSR observers often find litigation itself less interesting than picking through the wreckage of failed pre-trial negotiations to try to figure out what went wrong. The Boliden case is a particularly interesting and mysterious debris field because a number of factors suggest that the conditions for a negotiated settlement were ripe.
For one, Boliden outwardly prides itself on its ethical tradition, its high CSR scores, and its commitment to sustainable development, which it defines as social, environmental, and economic “responsibility.”
Even more importantly, Boliden has not always taken a militant stance on questions of its role in the Arica dumping. In a 2006 Q&A, the company wrote that “the question of Boliden’s thoughts about their responsibility in this matter is of course legitimate.”
It has called the Arica dumping “truly tragic” and “something we deeply regret.”
This is a far cry from the attack-the-victims type response that many companies choose to adopt from Day One.
Indeed for years, Boliden engineer Rolf Svedberg who signed off on the transfer in the 1980s, and was the company’s Chief Environmental Officer, drove the Arica story. When shown the contamination years later, after he had left Boliden, Svedberg was horrified and for years publicly insisted that Boliden take responsibility – he went so far as to star in a film about the contamination called Toxic Playground and to brief the Swedish Parliament on the urgency of the environmental and human health crisis.
Turning to the nature of the claims, it’s fair to say that their appeal in terms of justice and human sympathy are quite strong. The toxin at issue is a household name with big skull-and-crossbones stamped on it in every person’s mind, and urine tests show dangerous quantities of it in the victims.
As described in Toxic Playground, some of the claimants literally played on the toxic waste heap as children. The claimants can’t even be said to have benefited in some way from the underlying activity, as has sometimes been claimed of local communities who gain employment from a mine, for example.
By contrast, the company’s defenses seem particularly short on moral urgency, even by the standard of toxic tort defenses.
Boliden admits it created the 20,000 tons of toxic waste. It does not claim that its own conduct was affected by some accident beyond its control: the waste was shipped and off-loaded according to plan. Boliden even admits that its conduct, “thanks to the Basel Convention [on Transboundary Movements of Hazardous Wastes, which was in late-stage multilateral negotiations at the time and was adopted a few years later], would not have been possible today.”
A laymen’s gloss on Boliden’s argument? “We got away with it.”
Hobbesian Choice: Irresponsible or Just Ignorant?
Perhaps a more appealing Boliden argument is essentially “how could we have known?” Boliden claims it properly relied on the Chilean company’s representations that it could process the waste.
But the claimants say that the so-called “processing facility” was so woefully inadequate that Boliden’s engineers must have known it was a sham. They have also dug up a juicy bit of evidence: a Boliden patent application for waste-processing technology, filed a couple of years before it shipped to Chile, in which Boliden claims that no company anywhere in the world then had the ability to process such waste, which posed “enormous environmental problems.”
The legal argument Boliden is most focused on—but that is perhaps the least appealing in terms of public sympathy—is essentially “you can’t prove it’s our arsenic.” Boliden points to other arsenic-laden shipments that Promel received over the years that the company says lies right next to Boliden’s waste.
In legal terms, Boliden is right that this raises a causation hurdle for the claimants—though in public morality terms, it doesn’t explain why it should lead to a free pass for the arsenic Boliden doesn’t deny it shipped.
For U.S. lawyers, this may bring to mind the famous Summers v. Tice case, in which two hunters who both negligently shot at the plaintiff tried to escape liability by claiming that the plaintiff couldn’t prove whose bullet hit him. The California Supreme Court certainly didn’t buy it, though I don’t know enough about Chilean law to make a prediction.
Litigation Risks Reputation
Turning away from the relative merits of the arguments, it is interesting to note the lack of any obvious business or strategic impediments to a negotiated resolution. The amount being sought by the Chileans—around $17 million—is almost head-turningly modest in light of, for example, the tens of billions of dollars that BP has poured into its Gulf Coast claims settlement process. The shipment of smelting waste is not a key aspect of Boliden’s business that could be negatively impacted, nor does Boliden seem to have exposure to other similar claims—in Boliden’s own telling, the Arica incident was a one-off, an aberration.
It is also interesting to note that Boliden can’t complain for lack of cover on the shareholder front. Indeed, one of its largest shareholders—also one of Sweden’s largest banks—publicly called on the company to settle the case citing the company’s reputation and larger moral obligations.
This and other developments ensured that there was no way this case was going to proceed in the shadows: rather, the filing of the lawsuit and reaction to it generated front-page news in Sweden for weeks.
In Litigation We Trust?
In short, the raw material (to use metals-company language) for a negotiated resolution appears, at least from the outside, to have been in place. In February 2013, the claimants’ lawyers provided a summary of the strength of the case to Boliden as part of an invitation to discuss settlement. The company took a couple of weeks—then replied with a polite but firm “no thank you.”
Despite all the pro-settlement factors outlined above, it’s hard to call the move surprising. It is a classic jump to safety in a well-established thicket of legal defenses—causation, knowledge, gaps in applicable law—that have been protecting corporate defendants for decades.
The thicket of litigation often protects defendants as much by allowing them to outlast the endurance of their victims and critics. Boliden demonstrated this recently by arguing that the claimants had sued the wrong Boliden corporate entity, forcing the claimants’ legal team to go back and secure revised authorizations from all 700 claimants.
Claimants Hold Out for a Win
But from a CSR perspective, the thicket isn’t all that safe.
Properly organized and sufficiently financed modern claimants’ teams can be built to endure years of litigation. (Regarding the required new 700 authorizations, one U.S. consulting attorney for the claimants cheerfully told me “it’s always nice to get back in touch with the clients.”)
Moreover, the litigation throughout those years provides claimants with a narrative platform that is readily understood by the media and the public, through which they can attract new audiences to the merits of their claims and their complaints of corporate wrongdoing.
A quicker way to put the CSR perspective on the safety of the “thicket” is that even if you’re safe, you’re still stuck in a thicket.
Even If You Win the Battle, You Could Lose the War
To be fair to Boliden, part of its rationale for entering litigation may well be a desire for vindication. Litigation in our imagination continues to offer the possibility of a formal, final, clean and clear resolution that will allow the hopeful litigant to say “I was right” once and for all.
But it isn’t just CSR professionals who recognize that is rarely litigation’s outcome.
Even where litigation produces a final end to legal claims, this can mean little in terms of finality and clarity with society at large. In this case, it is hard to imagine what “vindication” would even look given that even Boliden won’t say that it “did the right thing” in Arica.
It is very easy, however, to imagine the litigation process siphoning off the company’s existingthoughtfulness and sympathy, if any remains, and leaving it more bitter—certainly if it loses, but also if it wins and the public does not fully accept the legitimacy of the decision.
CSR’s Moral Dynamics
The moral dynamics of CSR are part of what makes the field so interesting. A legal case can (sometimes) feel like a game of checkers: you press every advantage you have, and usually there is one clearly right or better move.
CSR, which plays out not just in court but in the markets and the broader “court” of public opinion, can feel more like chess, with a much richer array of stylistic approaches and strategic options. Sacrifices are key to great chess. They are played both as gambits for anticipated returns, for which they are famous, and, sometimes, just to establish a good board position. Playing them for the latter, real chess players know, takes courage.
I’ll keep posting on the Boliden/Arica case as it develops. For reference, the parties’ respective public materials on the Boliden/Arica case are here.