Extraterritoriality: fears that litigants may take advantage of sympathetic US legislation

Nuisance litigants are 'blackmailing' international corporations by taking advantage of sympathetic US legislation, a leading British in-house lawyer warned delegates at the International Bar Association (IBA) conference in Prague last week.


Charles Lawton, the head of legal at global Anglo-Australian mining company Rio Tinto, said litigants from around the world were using the Alien and Tort Claims Act to bring actions in the US that amounted to little more than 'fishing expeditions for discovery that are hugely costly to defend'.


Rio Tinto is currently fighting a damages claim brought by landowners on the Bougainville island of Papua New Guinea. The case - which was launched five years ago &150; is being heard in a San Francisco court under the tort legislation.


Mr Lawton complained that 'trying to defend a claim involving Papua New Guinea in a court in California, when all the evidence and witnesses are 10,000 miles away, is very difficult. From a practical point of view, you can't defend yourself'.


He questioned whether it was appropriate for the US to assert a prosecution right in a tort case that involved foreign parties based overseas. 'It is entirely nuisance litigation intended to blackmail large companies into settling,' said Mr Lawton.


Steve Berman, a partner at the Seattle office of Hagens Berman Sobol Shapiro, the US law firm acting for the claimants in the litigation, strongly refutes the suggestion that the claimants were engaging in 'nuisance litigation'. He said the case concerned very serious allegations against Rio Tinto, claiming that 'they effectively financed a war in which many people were killed and much land was contaminated. There were serious injuries &150; both to people and to the environment. So I don't call this nuisance litigation.'


Mr Berman continued: 'The notion that these cases should have been heard in Papua New Guinea is ludicrous. The claimants would have been arrested on the courthouse steps and jailed by the authorities.'


Rio Tinto denies the allegations.


Mr Berman also backed the principle of the Alien and Tort Claims Act, saying it 'is designed to cover violations of international law &150; acts that violate everyone's law. These are not simple slip and trip cases'.


Dieter Lange, the senior European partner at the London office of US law firm Wilmer Cutler Pickering Hale and Dorr, also generally criticised the principle of extraterritoriality. He blamed extraterritoriality for 'increasing international transactional costs' and for creating 'commercial and legal uncertainty that distorts trade and investment decisions'. He also claimed that it 'increases intergovernmental tensions as governments disagree on regulatory activity', citing ongoing disputes between the US and EU anti-trust authorities.