Mediating International Environmental Tort Claims: In the Shadow of the Alien Tort Claims Act

By Bassler, William G.; Segal, Yitzchok | Dispute Resolution Journal, November-January 2008 | Go to article overview

Mediating International Environmental Tort Claims: In the Shadow of the Alien Tort Claims Act


Bassler, William G., Segal, Yitzchok, Dispute Resolution Journal


Globalization has its dark side-e.g., multinational corporations committing large-scale environmental torts on foreign soil through their subsidiary operations. Victims in developing countries have few means of redressing these torts. This article discusses an advantageous alternative to litigation, which has proven ineffective: using the U.S. Alien Tort Claims Act as leverage to encourage multinational corporations to mediate these disputes.

Multinational corporations are increasingly flocking toward developing countries to expand their bases of operations.1 There are many reasons for this trend. Developing countries offer natural resources, tax advantages, and cheap labor. Their governments welcome this foreign investment because it boosts their economies.2 However, these investments often come at a cost: damage to the local environment. 3 For example, such damage has been alleged as the result of Texaco's oil exploration and waste disposal practices in Ecuador4 and British and Australian mining activities in New Guinea.5

A substantial disparity exists between Western countries and developing countries in the legal protection of the environment.6 Many reasons account for the lack of environmental concern developing countries exhibit. These include undemocratic governments, a cavalier attitude toward justice, substandard environmental legislation, an underdeveloped tort law, absence of class action remedies, and garden-variety corruption. 7 Moreover, most environmental regulation occurs at the national level and it fails to address cross-border environmental issues. 8 Multinational corporations evade regulation by using wholly or partially owned subsidiaries to make their investments in developing countries. The multinational corporation, as a separate legal entity, is insulated from regulation by the host country and immune from liability as a result of the subsidiary's operations, while the subsidiary is insulated from regulation by the parent corporation's home jurisdiction.9 As one commentator has written, "Multinational corporations defy our most fundamental assumptions about the mapping of legal persons to territorial jurisdiction."10 Commentators contend that multinational corporations often exploit the jurisdictional vacuum to perpetrate environmental torts.11

What remedies are available to victims of environmental torts committed by multinational corporations in developing countries? Natalie Bridgeman has identified four potential legal theories that could be used in U.S. courts to seek redress for these torts: (1) applying U.S. environmental law extraterritorially; (2) resorting to environmental treaties or customary international environmental law; (3) applying foreign environmental law; and (4) using the Alien Tort Claims Act (ATCA). Bridgeman concluded that the first three theories "are not meaningful solutions" to the problem of lack of corporate environmental accountability.12 She only considered the last theory, based on the ATCA, to be "the best among four very weak alternatives."13

This assessment is correct. The ATCA has had minimal success in imposing liability on transnational corporations for environmental property damage caused by their subsidiaries. Plaintiffs have not been winning these cases in federal court.14 Yet this should not discourage environmental tort victims from asserting ATCA claims because they could use these claims to force the multinationals into international mediation. An ATCA lawsuit against a multinational corporation has formidable collateral effects. That is why corporations dread ATCA suits. Therefore, they should welcome mediation, which is less costly, less embarrassing, and less time consuming compared to a public litigation showdown.15 Plaintiffs can brandish the ATCA as a sword to move the multinational tortfeasor into the mediation room. Once there, both sides will benefit: plaintiffs will achieve better results than they would in court, and multinationals will be spared the nightmarish ordeal of defending an ATCA suit. …

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