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Drummond Case: Effects on Latin Business?

Latin America Advisor

A federal jury in Alabama [recently] cleared Birmingham-based coal company Drummond of charges that it contracted paramilitaries to kill three union members at a mine it owned in Colombia. It was the first time a US company has gone to trial under the 1789 Alien Tort Claims Act. Is this the end of the line for the Drummond case? How will the ruling impact US firms operating in Latin America?

Jorge Lara, Partner at Baker & McKenzie in Colombia: I doubt that this is the end of the line for the Drummond case. This is another case that, besides its judicial interest, should have a political and ideological impact, like those of Coca Cola and Chiquita. There are many groups around the world working to ensure that these cases remain in the news for a long time. For this purpose, the legal and judicial merits are less important. Thus, the Alabama jury's decision will be appealed and, probably, a related legal action will start in Colombia or in any other place based on the same facts, regardless of the decisions reached in the US. It should be noted that the legal cases that are widely and systematically publicized are those related to the so-called paramilitary organizations. It is rare that judicial news involving guerrilla figures receives much attention. The exception was Simon Trinidad's first trial, which was annulled because the jury was unable to reach a verdict. But Trinidad's second trial, where he was found guilty, was reported very discretely. And, the fact that the FARC's leaders are required to be extradited to the US, due to their drug trafficking activities, has not hit a first page.

Robert C. Helander, Managing Partner at InterConsult LLP in New York: The long-standing principle that the courts of one nation will not judge cases where the citizens of a second nation engage in unlawful acts in their home country is at play in this case. Drummond involves a claim that the company was complicit in the assassination of labor leaders at its coal operation in Colombia by Colombian paramilitary forces. The acquittal of the company is disappointing to the plaintiff-beneficiaries, but for any corporation operating anywhere in the world, it is a disturbing expansion of US federal jurisdiction across sovereign borders. The heart of controversy is a 1789 law passed by Congress, the Alien Tort Statute (ATS) that conferred jurisdiction on federal district (trial) courts to hear claims by non-US citizens arising out of certain events in a foreign country. That law lay largely dormant until human rights activists used it in the 1980s to sue an alleged torturer in federal court for acts committed in the Central American civil wars, (Filartega). The Supreme Court has spoken in another case (Sosa) that, while the ATS may confer jurisdiction, the kinds of claims that may be brought are severely limited. In another case (Doe I v. Unocal) that seems more squarely on point with Drummond, the successful plaintiffs at the district court level settled before a decision on appeal and the verdict was withdrawn, i.e., its precedential value is nullified. The Drummond plaintiffs (and their labor union sponsors) have won, even though they lost the verdict, because the district court allowed the trial to proceed to a conclusion on the merits; and the company has lost, even though it was acquitted, because it and any other corporation will now be subject to similar suits if the trial is not nullified on appeal. There will be more of these cases brought by labor and human rights activists until the Supremes rule with greater clarity on what kinds of claims can be pursued by foreigners in US courts. Stay tuned.

Maria Velez de Berliner, President of Latin Intelligence Corporation: It seems unlikely Drummond will lose on appeal, particularly given the background of the parapolitical disclosures in Colombia. The collusion between paramilitaries, armed forces, businesses, and government officials will make it difficult for a court to file against a defendant who may or may not have sought security by means tolerated in the business environment of Colombia. The ruling is specific to Colombia. However, the five year-old Drummond case does open the door to suits against multinationals, not only from the US, that operate in Latin America, either in national or foreign jurisdictions. We saw the cases of Petrobras and Repsol YPF when Bolivia prosecuted their executives for fraud and tax evasion. Venezuela is ready to initiate proceedings to deport foreign nationals for alleged political meddling. US companies doing business in Latin America must recognize that the political and judicial landscapes have changed in several countries. Governments with large public support for nationalist and populist policies will not decline an opportunity to make a foreign company the scapegoat, if it suits the government's political agenda. Law suits in US courts are a fast-growing export from Latin America to the US. Therefore, keeping on the straight and narrow of the law, no matter how often it is violated by the locals, is a matter of self-preservation by any foreign company working in the region. Murder is murder. It should never be condoned, accepted, or tolerated by anyone, national or foreigner. However, to prove murder requires analysis of evidence beyond any reasonable doubt. This test is difficult to meet in the murky legal environments of Colombia and the rest of Latin America.

Republished with permission from the Inter-American Dialogue's daily Latin America Advisor newsletter. 

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