Unocal pays out in Burma abuse case

Financial Times

December 14, 2004

Unocal said yesterday it had reached an out-of-court settlement in a landmark case alleging that the energy company was complicit in human rights abuses committed as part of the construction of a gas pipeline in Burma.

The settlement is the first reached in any case brought against a US company under the Alien Tort Claims Act, which allows foreigners to sue in US courts companies that are alleged to violate human rights abroad.

The case against Unocal was scheduled to go to trial in June before a California state court, and a separate action was being fought out in federal courts. Both cases are now settled.

The legal action, filed in 1996 on behalf of villagers abused by Burmese soldiers, was the first of a series of similar actions charging US companies with complicity in abuses. The US Council for International Business, which represents multinational companies, said that Unocal's decision to settle did not diminish its opposition to what it called "inappropriate" cases filed under the alien tort act. Unocal said it had reached agreement in principal for a settlement with the plaintiffs, but did not give details.

Terry Collingsworth of the International Labor Rights Fund, the lead lawyer for the plaintiffs, said he had agreed with Unocal not to divulge the agreement until it is discussed with the villagers who brought the case. But he said it was a "landmark settlement that is going to do some great things for the victims in Burma".

Unocal is a junior partner in the Yadana gas project operated by Total, the French energy group, alongside Thailand's PTT and Myanmar Oil and Gas Enterprise. It has a 28 per cent stake in both the gas production company and the controversial pipeline, which carries gas from the offshore field through Burma to Thailand. The pipeline is operated by Total and PTT.

Unocal has firmly contested the claims linking it to human rights abuses. In June, it secured a ruling from a California superior court judge that its participation in the pipeline did not make it directly liable for the abuses perpetrated by the Burmese military.

The court did, however, allow the suit that was resolved yesterday. This alleged Unocal had aided the military knowing that such abuses were occurring.

Analysts yesterday said that a "reasonable financial settlement" would be a positive for the company, eliminating what one called "a long distracting issue" for it.

Additional reporting by Martin Arnold