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Lessons Drawn from the Apartheid Litigation

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Lessons Drawn from the Apartheid Litigation 21 Towards Making Blood Money Visible: Lessons Drawn from the Apartheid Litigation INGRID GUBBAY* I INTRODUCTION UCH HAS BEEN written and said about the conceptual challenges raised in the two cases comprising the Apartheid litigation1 (‘Re Apartheid’). Of the 100 Mcases or so run under the Alien Tort Claims Act2 (ATCA) since its reinvigora- tion in 1980, Re Apartheid is unique in that it has spotlighted the high level of ‘collabora- tion/integration between non South African sectors of the business community and the State, in extending, maintaining, and profiteering from the Apartheid regime’.3 First filed under the ATCA in the Southern District Court in 2002, the South African plaintiffs have sought to publicly interrogate banks and other major corporations for their key role in allegedly supporting the crimes against humanity committed by the regime during the period of its operation between 1948 until the election of Nelson Mandela in 1994. The case narrative, told first through the reports to the Truth and Reconciliation Commission of South Africa4 (TRC), and later in the US courts, establishes unequivocally that the financial and operational support provided by certain corporations maintained * The author is the European head of human rights and environmental law at Hausfeld & Co LLP, based in London. Her role in the litigation is to assist on areas of international law, and liaise with members of the Khulumani group. She worked in South Africa taking depositions from the named plaintiffs in the Khulumani case. The author would like to thank the Khulumani litigation team in Re Apartheid, for their contribution to this chapter. They are currently Michael Hausfeld, Jeannine Kenney and Kristen Ward Broz, based in the Washington DC office of Hausfeld LLP. 1 In Re South African Apartheid, 617F. Supp.2d 228 (S.D.N.Y. 2009) now addresses the complaints of the two cases formerly known as Khulumani v Barclays Nat’l Bank Ltd 504F 3d254 (2nd Cir 2007) and Ntzebeza v Daimler AG. The Khulumani complaint, www.khulumani.net/khulumani/documents/category/5-us-lawsuit. html, accessed 30 August 2013. Note, Khulumani means ‘speak out’ in Zulu. 2 Alien Tort Claims Act (ATCA), 28 U.S.C. § 1350 (2006). 3 For example, the Statement of Owen Horwood, South African Minister for Finance, in 1983, ‘The story of the economic development of this country is intimately bound up with Foreign capital, technology, and exper- tise. Significant investments usually bring all three. It allows us to do what we want rather more quickly It allows us to do some things better than we would otherwise do’ in South African Restrictions, Hearing before the Subcommittee on Financial Institutions, Supervision, Regulation and Insurance of the House Committee on Banking, Finance and Urban Affairs, 98th Cong, 1st Sess, 8 June 1983, 102. 4 The Promotion of National Unity and Reconciliation Act (SA) 1995, is the founding Act of the Truth Commission. 338 Ingrid Gubbay and lengthened the duration of apartheid, and the suffering of its victims, who now seek to bring them to account. Scholars following developments in lenders’ liability have writ- ten on the importance of the contribution made in the Re Apartheid case to this emerging legal area. Michalowski noted that: Given the scarcity of legal analysis and authority on the problem of complicity for financing gross human rights violations committed by regimes, it is likely that the arguments on this point, will prove influential far beyond litigation against banks under the ATCA. South African Apartheid Litigation is thus significant not only for future complicity cases under ATCA, but also for advancing the debate on lender liability for complicity in gross human rights violations generally.5 Other courts adjudicating under the ATCA have since adopted the reasoning in the Apartheid litigation.6 Re Apartheid, however, has become illustrative of the nuanced approach the US Court took in filleting out any legal links between the banks (lenders), who provided the com- mercial loans and the atrocities committed by the Special Forces, despite the existence of specific international and domestic trade and investment prohibitions, sanctions and embargoes in place during this period. Conversely, the remaining case defendants who held direct contracts with the apartheid regime in the key identified sectors of technology, weapons and the automotive industries met the requisite causative standard in the central case. The chapter begins by outlining recent developments in the US case law and the scope of the ATCA in so far as it impacts on the Apartheid litigation and the future access of foreign plaintiffs to the US courts. The background to the key role of foreign finance in supporting the apartheid regime, which led up to the decision of South African organisa- tions to file the case in the United States, includes an exposition of the reports commis- sioned by the TRC at the business hearings. The submissions to the TRC demonstrate how the evidence gathered for this purpose can be produced later in a judicial context and thus align and inform the objectives of the litigation with the aims of transitional justice. The key challenge in reaching the requisite actus reas standard to establish lenders’ liability is reflected in the decision to narrow the original complaint and drop the defend- ant banks from the action, because the Court’s formulation of the ‘neutrality’ and ‘fun- gibility’7 of money rendered commercial loans too far removed in this context, and so there was a real risk the banks’ inclusion would weaken the case. Ultimately, the purpose here is first to elucidate the constraints of legal theory with its abstract approach to analysing the causative links between the provision of commercial loans which substantially enabled the atrocities committed by state agents, and second to draw upon some of the recent discussion on alternative approaches to establishing these hitherto elusive links. 5 For a contrasting view of the approach taken in the Apartheid litigation with US case law on funding on terrorism see generally, S Michalowski, ‘No Complicity Liability for Funding Gross Human Rights Violations?’ (2012) 30 Berkeley Journal of International Law 451. 6 ibid, 37, eg Doe v Nestle, SA et al, 748F Supp.2d at 1096. 7 The Oxford Dictionary: ‘A fungible good can replace or be replaced by another identical item mutually interchangeable – money is fungible, it can be raised for one purpose and used for another’. Lessons Drawn from the Apartheid Litigation 339 II ALIEN TORTS CLAIMS ACT (ATCA) The ATCA of 1789, is part of the United States Judiciary Act, and thus is a jurisdictional statute only. The relevant text for these purposes states: The District Courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of Nations or Treaty of the United States. The text itself does not place any limitations on who can be a defendant. Conversely, it does limit who can be a plaintiff (‘alien’), the type of action (‘tort only’) and norm vio- lated (‘law of Nations or Treaty of the United States’). It removes all common law actions for violations of international law from state courts. ATCA cases are in essence federal common law actions claims. In 1980 the ATCA was reinvigorated in the case of Filartiga v Pena Irala8 in which the Second Circuit Court of Appeals then held the ATCA allowed claims to sue in US courts for serious violations of international law. What followed was a string of ATCA cases, first against individuals associated with authoritarian regimes, and then later against transnational corporations for aiding and abetting them. The scope of the violations allowed under the ATCA was clarified in 2004 in the case of Sosa v Alvarez – Machain (Sosa). The Court in Sosa held that the ATCA provided a limited cause of action for foreign plaintiffs for violations of international norms that are ‘specific’ universal and obligatory’9 in character, consistent with the norms of the eighteenth century prohibiting ‘violations of safe conduct’ ‘infringements of ambassadors’ and ‘acts of piracy’. Accordingly, the US courts have recognised that cases alleging crimes against humanity, genocide, extra-judicial killing, torture, arbitrary detention, and cruel and inhuman treatment are such violations of international law consistent with these norms, albeit subject to the statute being interpreted narrowly. Thus, the main litigation issues for corporate complicity under the ACTA are, how to define what falls under the law of nations, whether cases can be brought against corporations, whether the ACTA encompasses liability for aiding and abetting and if so, what standard should apply to determine the actus reus and mens rea of such liability.10 III RECENT ATCA DEVELOPMENTS The ATCA has proved highly controversial with respect to its application by foreign plaintiffs against corporate defendants. The resultant pressure from political and indus- try interests has led to intense judicial scrutiny as to the extent of its extraterritorial application, evidenced recently in the Supreme Court’s decision in the Kiobel v Royal Dutch Petroleum11 (Kiobel) case. Nigerian petitioners residing in the United States filed suit under the ATCA against Royal Dutch Shell alleging certain Dutch, British and Nigerian corporations aided and abetted the Nigerian government in committing 8 Filartiga v Pena-Irala 630F.2D876,880 (2nd Cir 1980). 9 Sosa v Alvarez–Machain 542 US 692, 724 (2004). 10 Michalowski (n
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