Energy companies that operate in political hotspots are increasingly at risk of being sued under international law for human-rights abuses even if they aren’t directly involved, legal experts say.
Companies choosing to operate in such areas need to not only prepare for and reduce the risks, they need to work with governments, non-governmental organizations and the country’s citizens to stop human-rights violations, lawyers and other speakers told an energy and law conference in Calgary.
“Companies should be champions for human-rights reforms in the companies in which they operate,” Alex Neve, secretary-general for Amnesty International’s Canadian section, told the International Bar Association’s first-ever energy law conference held in Calgary last week. “Impartial human-rights work is not political . . . and it’s very, very good for business.”
The law association, based in London, England, has about 1,800 member-lawyers around the world.
One of the conference organizers, Talisman Energy Inc., is being sued in the U.S. by the Presbyterian Church of Sudan and various other plaintiffs over the Calgary oil and gas producer’s nearly four years of operation in the North African country.
Last month, a U.S. District Court judge rejected Talisman’s request to dismiss the suit on jurisdictional grounds, after the company argued that the action was improperly filed in the U.S. The lawsuit accuses Talisman of “complicity in genocide and war crimes” during its time in Sudan.
The company has always denied that it was in any way involved with the decades-old civil war in Sudan, and has insisted that its presence helped promote peace and development.
EnCana Corp., which is part of the OCP Consortium that built a 500- kilometre oil pipeline through Amazon rainforest in Ecuador, has also come under attack by human-rights groups and local communities. The company has reportedly put its $2-billion worth of assets in Ecuador up for sale.
Conference co-chair Jim Bell, a lawyer for Talisman Energy, says during the last 10 years “energy projects have come under increasing scrutiny from NGOs, from governments, private citizens, from plaintiffs’ lawyers.
“It’s important that energy lawyers around the world understand these issues as they develop energy projects,” he said in an interview.
“What I would hope is that as we develop energy projects, we all do a better job of addressing corporate social responsibility issues, both for energy projects in North America . . . or projects internationally,” Bell said.
Gare Smith, a lawyer at Foley Hoag in Washington, D.C., told the conference that multinational energy companies will not only be held accountable for themselves in other countries, but for their joint-venture partners, contractors and sub-contractors, suppliers and service providers. Companies often find themselves in trouble when the foreign security force they hire engages in human-rights abuses, Smith noted. “Security is the most important human-rights issue for any companies operating in conflict zones.”
A delegate from Nigeria told the conference about one energy company’s private police who shot at protesters during a peaceful demonstration.
Companies can’t simply trust that their private security will abide by international human-rights laws and practices, Smith said. “You need to not take people at their word, unfortunately.”
Because of concern about how governments use resource revenue, human-rights organizations are pushing for an international law that would require energy companies to publicly disclose all of the revenue streams they pay to foreign governments, Smith said.
Businesses can either manage the human-rights risks entailed in operating in other countries or be managed by these risks, he said. He recommended that all firms should:
* Conduct an investigation into the country’s human-rights record and compare it to the firm’s corporate and social responsibility policies;
* Adopt a code of conduct that is implemented on the ground, communicated to local communities, and is monitored and enforced;
* Adopt a security policy;
* Reduce the risk in joint ventures and ensure that every other company you work with follows your policies; and
* Engage in dialogue with all stakeholders, including non-government organizations, indigenous people and local communities.
When it comes to Canada, some speakers said that governments, energy regulators and corporations here have made good progress in recent years in balancing energy development with protection of human rights and corporate social responsibility.
Ray Hansen, a lawyer for Syncrude Canada Ltd., says the oilsands operator has gone from having a handful of unskilled aboriginal workers in the 1970s to being the largest private-sector employer of native people in the country. Syncrude now has about 700 aboriginal employees in various positions, including nursing, accounting and law, he said.
The company has also provided business development opportunities for neighbouring First Nations, and last year Syncrude did $100-million worth of contracts with aboriginal-owned businesses in the Athabasca region, he said. “A lot of these businesses are now operating outside of Alberta. They’re a great success,” Hansen said.
(Mark Lowey can be reached at mark@businessedge.ca)
