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.