THE GOVERNMENT‘S DECISION TO APPROVE THE CONTINUATION OF REPARATIONS LITIGATION IN NEW YORK COURTS

Last week the government decided to drop its opposition to litigation in a New York court against five leading international companies that are accused of "aiding and abetting" "crimes committed by the apartheid government". Its decision could have negative implications not only for South Africa, but also for international investment in developing countries.

The case was originally launched in the District Court for the Southern District of New York by a number of plaintiffs represented by the Khulumani, Ntsebeza and Digmanwaje groups. The defendants included about fifty of the most prominent international corporations, banks and oil companies that had done business in South Africa during the apartheid era. The goal was to seek reparations - akin to the reparations that had been paid to survivors of the holocaust - reportedly to the sum of $US 40 billion.

In July 2003 the South African Minister of Justice, Penuell Maduna submitted an ex parte declaration in which he requested the court to dismiss the case because it interfered with matters of South African sovereign interest. He said that the cases interfered "with the policy embodied by the Truth and Reconciliation Commission", which "deliberately avoided a ‘victors' justice' approach to the crimes of apartheid and chose instead one based on confession and absolution, informed by the principles of reconciliation, reconstruction, reparation and goodwill." He added that in his "view the case is directly related to the sovereignty of the South African state and should be resolved through South Africa's own democratic process." He also insisted that "this litigation...will...discourage much-needed direct foreign investment in South Africa and thus delay the achievement of our central goals. Indeed, this litigation could have a destabilizing effect on the South African economy as investment is not only a driver of growth, but also employment."

The US State Department concurred and stated that the case could cause serious adverse consequences for significant United States interests. The US Government was concerned about the impact that the case might have on US relations with South Africa as well as those of "various foreign governments, including the United Kingdom and Canada, which have approached us via diplomatic channels to express their profound concern that their banks, corporations and other entities have been named as defendants" and their "strong belief that the issues raised in the litigation are most appropriately handled through South Africa's domestic process".

In 2004 the case was thrown out by the New York District Court but was appealed by the plaintiffs. In October 2007 the Second Circuit Court upheld the appeal on a vote that was split between Judges Katzmann and Hall on one side and Judge Korman on the other. The court also turned down the defendants' petition for a certiorari order to refer the case to the Supreme Court.

In his dissenting judgment, Judge Korman observed that the "majority contemplates a remand that would subject a foreign democratic nation to the indignity of having to defend policy judgments that were entrusted to it by a free people against an attack by private citizens and organizations who have lost the political battle at home. This dispute is not the business of the Judicial Branch of the United States."

In February 2009 the case landed back in the District Court in a hearing presided over by Judge Shira Scheindlin (whom the plaintiffs found to be generally sympathetic to their cause). On 8 April she decided to dismiss the claims against nearly all the "corporate defendants merely accused of doing business with the apartheid government of South Africa" but ruled that five corporations that might have "aided and abetted particular acts could be liable for the breadth of harms committed under apartheid". These included General Motors, Ford Motor Company, IBM, Rheinmetall Group AG and Daimler AG based on allegations that they had "abetted apartheid crimes including torture, extra-judicial killings and denationalization." There is, however, some debate whether ‘abetting' would require ‘intent' or simply ‘knowledge' of the human rights abuses involved.

In his letter of 1 September 2009 to Judge Scheindlin, Minister of Justice Radebe said that her dismissal of the claims against companies based solely on the fact that they did business with the apartheid government had addressed some of the Government's earlier concerns. However, the South African Government now believed that the New York District Court was "an appropriate forum to hear the remaining claims of aiding and abetting in violation of international law."

By so doing Minister Radebe contradicted the position adopted by his predecessor, Minister Penuell Maduna. He also accepted that a US district court has the competence to adjudicate issues related to South Africa's troubled and complex history. The decision will certainly do nothing to promote good relations with the five companies involved and might well have a negative impact on their future investment decisions. Collectively they employ tens of thousands of South Africans and make an enormous contribution to our economy.

Minister Radebe also informed Judge Scheindlin that that plaintiffs had indicated that they would be happy to have the case settled out of court in South Africa and that the Government would be willing to facilitate matters in this regard. It remains to be seen what the companies involved will think of this offer.

In their submission in the 2007 court case, the corporations argued that "the maintenance of these actions....is an affront to South Africa's sovereignty, an irritant to US Foreign relations with that country and others, and a disincentive to future multinational corporate investment in developing economies." They have a point. By this measure any multinational corporation whose products or services are used by governments with less than perfect human rights records (China, Russia, nearly all Arab countries, and much of Africa and south Asia) might be liable for punitive sanctions.

For that matter, companies that provided services to some of the frontline states during the apartheid era would also be liable to claims - since several of them - according to Freedom House - had even worse political and civil rights ratings than South Africa. Judge Korman was right: this dispute is not the business of the judicial branch of the United States.

Statement issued by Dave Steward Executive Director, Centre for Constitutional Rights, September 10 2009

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