TheCorporateCounsel.net

This Freshfields blog discusses the recent federal jury verdict against Chiquita Brands holding the company liable for financing a Colombian paramilitary group. The blog is a reminder that violations of the FCPA are far from the only risks facing companies with foreign operations. It reviews three specific statutes that can provide a basis for imposing liability for companies doing business in troubled parts of the world. The statutes are the Anti-Terrorism Act (ATA), the Alien Tort Statute (ATS) and the Torture Victim Protection Act (TVPA).

The blog discusses recent litigation arising under the statutes, and this excerpt highlights the need for good practices and the potentially staggering damages companies can face under these statutes and under local law:

As companies continue to work and expand their operations abroad, the Chiquita verdict and other litigations serve as an important reminder of the exposure that corporations may face for their international operations. Companies should therefore review their business practices in foreign jurisdictions and take steps to limit exposure. Good practices will likely include conducting risk assessments, implementing strengthened due diligence procedures, exercising caution when choosing counterparties, and identifying and addressing potential red flags in transactions.

Corporations should also be aware that conducting business in particular regions may drastically increase an entity’s likelihood of facing an ATA, ATS, or TVPA litigation. As the Chiquita decision shows, juries in such litigations may award sizable damages awards that might outweigh the benefits of operating in these areas—dramatically altering a corporation’s cost-benefit analysis. Going forward, operating in these regions could expose a company to millions, if not billions, of dollars in damages.

The blog also cautions that although the Chiquita verdict itself resulted from claims arising under Colombian law, it represents the first time that an American jury has held a major US corporation liable for human rights abuses in another country and may open the door to similar lawsuits under these statutes.

– John Jenkins