International Damages: Ford and IBM sued for South African apartheid abuses

apartheid lawsuit

Calculating damages across borders can be complex for a number of reasons. In this lawsuit, South African plaintiffs were suing American companies for alleged violations to international law, which took place in apartheid-era South Africa. The potential damages were in the billions of dollars.

The case was filed in 2002 under the Alien Tort Statute, a 1789 law that allows non-U.S. citizens to file cases in U.S. courts for alleged international law violations. The plaintiffs in this case accused the Ford and IBM of having made military vehicles and computers for South African security forces, thereby aiding the apartheid government in abuses including killing and torture between the 1970s and 1990s. (GM was also a defendant prior to its bankruptcy.)

A spokeswoman for the plaintiffs attempted to explain the connection between the defendants and the allegations, stating that “without petrol to drive the tanks, police trucks and planes, without the technology to run computers, without the guns and bullets and finance to pay for it, apartheid could not have survived.” Ninety-seven plaintiffs were named in the case, including the four categories: disappearance, detention without trial, assault and injury, and extra-judicial killings.

A lawyer working pro bono on the case said the case had the “potential to change the relationship between states, individuals and multinational corporations with respect to human rights”. The Guardian reports that he dismissed reports that the sums being claimed were $400 billion, saying only a grand jury could determine the damages.

The South African government was opposed to the lawsuit on the grounds that it undermines the state’s sovereignty, that it could hurt foreign investments, and that the Truth and Reconciliation Commission

In 2013, the Alien Tort Statute was narrowed in the case Kiobel et al v. Royal Dutch Petroleum Co et al. The Supreme Court specified that the law was to only relate to violations that occur in the United States, or places that “touch and concern” U.S. territory. Four months after this ruling, it was on these grounds that Ford and IBM sought for the case to be dismissed.

Although U.S. District Judge Shira Scheindlin gave the plaintiffs additional time to attempt to meet the new standards for the statute, the violations were made by Ford and IBM’s South African ‘units’, which clearly occurred abroad.

Judge Scheindlin dismissed the lawsuit, finding that the case does not belong in U.S. Courts, and that the companies were not able to be held liable because the plaintiffs did not show ‘relevant conduct’ by the companies.  She noted her personal conflict, writing “That these plaintiffs are left without relief in an American court is regrettable, but I am bound to follow [legal precedent], no matter what my personal view of the law may be.”

You can read Judge Scheindlin’s full opinion and order here.

Read more about international economic damages:

Industry example: ‘What the Internationalization of Climate Litigation Could Mean for Canadian Oil and Gas Companies’. Professor of international law at the University of British Columbia, Michael Byers, explained his role, stating “what we’re doing as environmental lawyers is simply saying to companies and investors, you might not have considered the possibility of foreign judgments and what that might mean.”

Experts: Some economic experts have experience in calculating damages in international lawsuits, or suits that involve cross-national or multi-national plaintiffs or defendants. Dwight Steward, Ph.D., for example, has expertise in calculating damages in lawsuits that involve Latin American immigrants working in the U.S.

J.R. Randall

J.R. Randall is an economist who resides in the Bay Area. He focuses his interest on range of economic topics. He has interest in deep sea fishing and art.