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Settlement expected in apartheid case

A lawyer representing the plaintiffs said the claims had "absolute merit" Reuters

A major apartheid lawsuit involving multinationals and Swiss companies is to go ahead in the United States but could be settled early, an expert has said.

This content was published on May 14, 2008 - 21:56

Plaintiffs representing black South Africans are claiming $400 billion (SFr420 billion) in damages from 50 prominent companies they say violated international law and supported South Africa's apartheid regime between 1948 and 1994.

A decision by the US Supreme Court this week to uphold a 2007 appeal court ruling allowed the case to go forward, paving the way for the plaintiffs to now settle rather than go to trial, Martin Sychold, of the Swiss Institute of Comparative Law, told swissinfo on Wednesday.

"They hope that the defendants, to avoid negative publicity and years of investing money in legal fees, will simply say 'look, we are prepared to pay half the millions that you are demanding'," he said.

"In the US there is an industry of lawyers and other professions who make their money by targeting these deep pocket defendants."

The case, which involves multinationals such as Coca-Cola, Ford and Fujitsu, also figures UBS, Credit Suisse, Holcim, Ems-Chemie, Novartis, Nestlé, Unaxis and Sulzer.

It is based on the Aliens Tort Claims Act, an 18th century law that allows foreigners to sue in US courts over international law violations.

History repeated

The class-action lawsuit was filed in 2002 by three plaintiffs on behalf of all people living in South Africa under apartheid, and was rejected in 2004 by a US district judge. But a ruling last year by the 2nd US Circuit Court of Appeals in New York allowed "an unprecedented and sprawling lawsuit to move forward".

The Supreme Court said on Monday that it could not intervene in the dispute because four of its nine justices had to sit out the case over apparent conflicts of interest and the only path it could take was to uphold the former ruling.

Charles Abrahams, a lawyer acting for one of the plaintiffs, the Khulumani Support Group, said: "It certainly shows that there is absolute merit in the claims that were filed against the corporations and we now look forward to this matter unfolding further."

The companies involved had earlier asked the Supreme Court to abandon the legal proceedings.

A spokesman for one of the defendants, UBS, said they were disappointed the case was not heard by the Supreme Court.

"We remain confident that the charges will be dismissed. We are considering our options with our lawyers."

Sychold said that without a settlement a lengthy trial would follow during which extensive evidence would have to be heard. An outcome could take years.

He added: "Swiss people are very interested in this, of course, after the cases that were brought against the Swiss banks for money in Jewish accounts in the Holocaust. It's basically just a repeat of that.

"There's probably no end to this because it shows that US long-arm jurisdiction statutes can be effectively used by people to sue deep pocket defendants."

He predicted similar cases could happen in the future, with plaintiffs searching out major companies that can afford big settlements, and using the Aliens Tort Claims Act to take a case to court that did not happen locally.

"There's basically only one place in the world where you can do that and that's the United States. That's where all the different elements come together. There's certain to be more of these cases," said Sychold.

swissinfo, Jessica Dacey

In brief

Swiss firms UBS, Credit Suisse, Holcim, Ems-Chemie, Novartis, Nestlé, Unaxis and Sulzer are all named in the class-action lawsuit.

Other international companies include Citigroup, JPMorgan Chase, ExxonMobil and IBM.

In dismissing the case in 2004, US district judge John Sprizzo described the suits as "frivolous" and said at most the "defendants benefited from the unlawful state action of the apartheid government" by doing business with South Africa.

He said there was no meaningful assertion by the plaintiffs that actions by the defendants directly caused alleged murders, torture and crimes against humanity from 1948 to 1984.

The South African government had urged for the dismissals, saying the claim could hurt its economy.

Lawyers representing the plaintiffs appealed and the case went to the 2nd US Circuit Court of Appeals in New York, which ruled the class-action lawsuit could move forward.

A US Supreme Court hearing on May 12 found four of the nine justices had ties to some of the defendants in the case – apparent conflicts of interest.

As a result, the court did not have the required six justices to hear the case, and the earlier Court of Appeals ruling had to be upheld.

Business groups and the Bush administration argued the lawsuit was damaging international relations and threatened to hurt South Africa's economic development.

Following the Supreme Court hearing, lawyers representing the South Africans said they planned to show more clearly how the defendants assisted the apartheid government.

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