New blog series on Business & Human Rights

I am in the process of rolling out a Huffington Post blog series on the topic of Business & Human Rights (BHR). The first two blogs introduce the topic and lay the foundation for a series of slightly more challenging analyses and criticisms that will be forthcoming in the next few weeks. Always happy to hear feedback by email or Twitter.

 

Response re the Challenges of Defending Human Rights Defenders

Ted Folkman at Letters Blogatory posted a rather dismissive take on a recent letter I signed to the UN Special Rapporteur for Human Rights Defenders (now on Twitter!) on the situations facing the human rights defenders in the Chevron/Ecuador case. My response below (also published by Ted).

I’ll briefly respond to one point and add one observation.

As someone who watched things unfold, I can say that Ted’s speculative claim that “the reason Chevron’s threats were so potent was because there was some underlying wrongdoing that made Patton Boggs and the others perceive a serious risk of liability” is wrong. It is true, as he says, that some “allies” like Burford were “spooked,” in the sense that as soon as they heard Chevron’s allegations they starting looking for the exit (including, in Burford’s case, by coordinating with Chevron behind their own clients’ backs). Others were the victims of flat-out, unapologetic economic extortion campaigns, such as folks from Stratus Consulting, the company that Chevron brought to its knees by crushing it with litigation, intervening in a dispute with its litigation insurer to make sure the insurer would not cover the litigation expenses, and sending smear-campaign letters to Stratus’ other clients. (How we all tolerate this kind of conduct as just “part of the game” is beyond me.) But allies who took the time to unpack Chevron’s allegations and really understand the facts did not end up abandoning ship.

Ted thinks Patton Boggs is an example of someone “spooked” on the facts, like Burford, or a victim of extortion, like Stratus. Not so. In reality, there were two Patton Boggs—the team that actually worked on the case and understood it, and the rest of the firm that couldn’t care less (and was reportedly mystified at how the firm ended up going up against a wealthy corporation like Chevron in the first place). A great untold story in this case is the heroism of the Patton Boggs team on the case. These men and women worked like dogs, for years, long past when there was any money coming in or any prospect of money. They faced constant attacks not just from Chevron but from corporate apologists in their own firm. And they never gave up on their clients. The larger firm settled with Chevron without telling them, to salvage a merger that was driven by economic considerations far beyond the Chevron case. The team that worked on the case was forced out of the firm in the process. Yet to this day they are proud of what they did and they should be.

Now my observation. Ted’s approach to the human rights perspective here—basically, encouraging “askance” as to whether the Ecuadorian case defenders should really be defended in light of the charges made against them by the very opponent the defenders are resisting—is exactly why the whole “human rights defender” and “environmental defender” movement, despite overflowing attention in the last few decades, is often considered weak at best. A recent report tallied 156 human rights defenders killed in 2015, with numbers of killings and harassment increasing year by year. Members of our team in Ecuador have braved anonymous death threats and other forms of harassment for literally decades. Continue reading

Endless Litigation Dept. (cont.)

As has been recently reported (Vice, Courthouse News) the arbitral tribunal hearing Chevron’s baseless “denial of justice” claim against the Republic of Ecuador (through which Chevron hopes to put Ecuador “on the hook” for the environmental judgment that private Ecuadorian plaintiffs won against Chevron in Ecuador’s courts) conducted a series of “judicial site inspections” of the abandoned waste pits and other contamination at Chevron’s former oil operations sites in the Ecuadorian Amazon. The transcripts of the inspection proceedings are available here.

For someone who was intimately involved in the judicial inspections process in the original case back in 2005-2006, reading the transcripts is an experience thick with déjà vu. The same scene: roosters crowing, sudden torrential rains, heat and insects, strained jokes about trying to hold it all together in a jungle setting. The same arguments: the open pits, the hidden pits, the produced water dumping system, the bogus remediation; and from Chevron: the RAP, the RAP, the RAP (i.e., the settlement which Chevron pretends released it from taking responsibility for the majority of the contamination, except that the private claimants in the Ecuador case were not party to it and in fact it expressly stated that it did not apply to their claims).

In between now and then, the same sites — ridiculously obviously contaminated sites — have been examined again and again and again and again, by government investigators, expert teams for various parties in various litigations, various human rights delegations, and countless celebrity and other observers. How long can Chevron continue to drag the world through this charade?

After enough people visit, will we at some point reach a critical mass? As Ted Folkman at Letters Blogatory astutely writes, “there is a bit of res ipsa loquitur that works in favor of the Ecuadoran position” when a person leaves the safe confines of the United States (where Chevron has successfully tainted the story of the Ecuador case with a blizzard of false allegations of fraud and wrongdoing) and arrives to see the pits themselves in all their horrible glory. “There are, of course, experts on both sides of the case, but when you are at the pit, you can see the oil, and a layman can simply look at the topography of the site and see how the oil would likely migrate.”

In fact, with all respect to Ted, what most people see is not migration of contaminants, but toxicity, sickness, and death, especially if their visit is combined to any degree with discussions with local residents about their invariably tragic family histories. To the extent most peoples’ thoughts stray into the legal realm, they typically start with questions of criminality, recklessness, negligence, and a commensurate call for justice.

A decade ago, shortly after I left full-time work on the case, Chevron made a public promise that it would inflict “a lifetime of appellate and collateral litigation” on the plaintiff communities if they dared to continue with their case and push it through to judgment. One cannot argue that an oil company like Chevron is not wise in the ways of the world and the halls of power; it knew it could inflict just such a fate, and it has.

Chevron has laid its cards on the table. It knows what it is doing. Now it’s our turn — “our” most broadly, basically everyone in society who is not Chevron or a reflection of its bottomless self-interest. What are we doing? The world will have to change if this company is going to change course. Maybe it is changing already.

Just clean it up, for f***s sake

Advocacy & analysis, litigation & arbitration: A response to Roger Alford

My response to Roger Alford’s recent post on Opinio Juris, in which he highlights a letter he wrote with colleagues in response to an earlier letter by other law professors (hosted or published by the Alliance for Justice) on issues of investor-State arbitration in the run-up to upcoming debates about TTP and TTIP/TAFTA.  As I note, the debate itself is an important and urgent one — but Alford’s attempt to elevate himself and his views to some privileged privileged position of truth above “political advocacy” is grating and unconvincing.

While I’m not surprised that the author of one letter thinks his letter is better than his opponents’, I think Mr. Alford goes too far by dismissing what he calls the Alliance for Justice letter as “political advocacy,” while characterizing his own as “a memorandum by scholars offering legal analysis.”  I would say both are 80% the former, 20% the latter.

The “analysis” provided by the Alford letter, as I read it, is that the world of international investment disputes is simple and objective: when a state has acted badly, it will be held liable; when it hasn’t, it won’t.  What’s the problem?

The problem is that litigation is litigation, even when it’s arbitration.  While “objective” facts matter, the system is driven by a competitive inter-subjectivity where the parties’ underlying resources and commitment to the dispute are often (some would say always) determinative of the outcome.  States can be trusted to continue to claim they act in the global public interest; corporations can be trusted to aggressively and creatively package state regulatory actions as arbitrary, discriminatory, etc.  The “truth” can be trusted to continue reside somewhere in between.

The case Alford et al choose to highlight as an example, S.D. Myers, is an example indeed.  Alford et al suggest that this is an easy case of state discrimination, asserting that the objective truth is that “Canada’s goal in imposing the [PCB export] ban was not to protect the environment, but to protect Canada’s PCB waste disposal industry, as acknowledged by Canada’s Minister for the Environment in a speech that she gave to the House of Commons.”

In fact, the ban was the product of more than a decade of deliberation by numerous Canadian authorities involving numerous complicated factors and considerations, including as just one example whether the ban was required for compliance with the Basel Convention.  The gloss in Alford’s letter would throw all this out this window in favor of a “truth” purportedly revealed when a cabinet minister, who was obviously not solely responsible for the ban, responded to a question during a parliamentary session with the off-the-cuff summary that “it is still the position of the government that the handling of PCBs should be done in Canada by Canadians.”  I’m not saying this remark was not a legitimate piece of evidence, but playing it for its “ah ha” value, as Alford et al do and as the claimant did in the arbitration, is an example of litigation — and advocacy — that should remind us that we know this process (and its relation to truth) all too well.

And in fact, even accepting the “in Canada by Canadians” position as the government’s official position doesn’t turn the case into a simplistic story of greedy nationalism.  That policy, to the extent it played a role, was substantively justified by the state’s legitimate interest in maintaining capacity and control in an area critical to citizen and environmental health and safety, especially in light of the possibility that the U.S. disposal facilities might become unavailable or were the border to be closed, which had happened  in the past.

The Alford letter tries to take the AFJ letter to task for focusing on what “might” happen.  It’s response, apparently, is to tell us with resounding confidence, is a standalone paragraph, what ”will” happen:

“Corporations cannot and will not gain victory simply by arguing reduced investment value. Rather, legitimate government conduct will be upheld as a proper exercise of sovereignty.”

Great!  We’re done then.  Or perhaps not quite, because how do we know this will happen.  It actually does tend to happen this way in the United States with respect to takings claims under the U.S. Constitution, but that’s because we have a strict interpretation of the takings clause by the highest court in the land, which interpretation is binding on all other (federal) courts, i.e. Tahoe/Lucas/Penn Central and the requirement that only “permanent obliteration of value” can result in a finding of regulatory taking.  Not only is there not a similar doctrine in international investment law, but the disaggregated system as currently established would be incapable of developing and enforcing it.  It could be included in the text of any upcoming treaty, but the leaked treaty texts see the them going in the other direction, setting up a system where regulatory acts will be evaluated according to their “legitimacy” – again, in a disaggregated system where each panel decides for itself, expressly not bound by any larger system of jurisprudence  or higher authority.

This is one of the reasons the AFJ letter complains of the lack of an appeals process.  The Alford letter respond that at least in the ICSID context there is the annulment process.  But  it acknowledges that annulment is available only where the arbitrators have “manifestly exceeded their authority or departed from a fundamental rule of procedure.”  This is akin to the standard for issuance of the writ of mandamus in the common law.  If we were to ditch the availability of appeal in this country and say, let’s just use mandamus to correct the most egregious cases, I doubt people would be satisfied with this as sufficient due process.

It’s also worth noting the details of the Alford et al assurance that states will have to pay foreign corporations for exercise of state regulatory functions “only if their acts are arbitrary, discriminatory, or otherwise violate the investment guarantees to which states have previously agreed.”  Pay attention to that last clause.  Countless tribunals have read “umbrella clauses” into investment treaties, meaning that any violation of even a purely domestic contract by the state thus gives rise to international liability under the treaty.  So we end up back in the realm on typical commercial contract litigation – except, as the AFJ letter notes but the Alford letter ignores, it’s a one-way street, because system only allows corporations to sue states, not vice versa.

We cannot blind ourselves to the fact that litigation often has a strategic dimension. Companies file lawsuits to pressure their opponents to settle, or to improve their negotiating position in ongoing and evolving relations.  Indeed settlement is probably the dominant feature of commercial litigation, where cases almost never go to trial.  Corporate claimants are certainly aware of this, and have particularly powerful leverage in the form of the system’s built-in sky-high costs and fees.  Remember, in arbitration you’re not just paying for counsel, you’re paying for the judge – in fact for three of them, and typically around $1,000 an hour.  The tribunal wants to hold a motions hearing?  That’s probably $20,000 just to get started, not counting travel and other expenses.   A two-week trial?  Do the math.  And while the U.S. has a fantastic in-house lawyers teed up and ready to litigate these cases, most countries don’t, and end up having to go to the club of elite law firms who specialize in this work and charge correspondingly elite-level fees for the privilege.

The issue of settlement raises particular concerns in the sovereign context because it goes beyond the issue of states using taxpayer money to pay off potentially meritless corporate claims.  States will often be tempted to “settle” a claim by revising the challenged regulation to suit the claimant.  The Alford letter faux-naively suggests that the regulatory taking concern is limited because “nothing in investment treaties requires states to change their domestic regulations” – instead, they can just pay damages.  Come on.  The idea that states are free to keep regulations on the books and just happily pay off private parties (at whatever damages figures those parties’ lawyers can sell to private tribunals) for the privilege is ridiculous.   The budgetary issue will almost always be determinative – by law, every regulation in the US is rigorously evaluated for its budgetary impact – and corporations know it.

As to a number of other issues in the AFJ letter, the Alford letter just ignores them.  The controversial cases such as Philip Morris’ tobacco labeling challenges or the gold-mining cases in El Salvador?  No comment.  The rotating lawyer/arbitrator system, in which a tiny club of individuals sit on panels and represent parties before those panels?  No comment.  The fact that arbitration often allows corporations to bypass domestic court systems?  No comment – except that the letter cites (for a different proposition) the BG Group case, where it was eventually decided that arbitrators were within their rights to relieve a claimant of the requirement to exhaust domestic remedies, even though that requirement was expressly stated in the treaty.

Alford is right that these battle lines are not new.  But his suggestion that he and his colleagues are not part of the fray, or are somehow above it – that his letter is “legal analysis” while his opponents only offer “political advocacy” – is unconvincing.  Just like litigation is litigation, advocacy is advocacy – it’s the butter on the bread of public discourse and Alford is more than welcome to spread it as thick as he likes.  But I for one can’t believe it’s not butter.