When a corporation is sued for human rights abuses, should their insurance company get stuck with the bill? Not according to a recent Ohio state court decision.
From 1995 to 2004, the U.S. fruit company Chiquita made payments to the AUC, the brutal Colombian paramilitaries responsible for thousands of murders in Colombia’s banana region. Because the U.S. government had designated the AUC as a terrorist organization, this was a federal crime. And Chiquita eventually pled guilty.
Many of the victims also sued Chiquita in federal court. (ERI serves as co-counsel for one such suit.) Chiquita denies any obligation to compensate the families of those killed by the terrorists it so generously bankrolled. And in a further effort to avoid any responsibility, Chiquita sued its insurers, claiming they were required to pay for its defense, and any damages that might be awarded. Earlier this month, an Ohio appellate court rejected Chiquita’s claim.
The Court held that “the policies cover only accidental occurrences, not intentional acts,” and, more importantly, that “Ohio public policy generally prohibits obtaining insurance to cover damages caused by intentional torts.” Since Chiquita was sued based on its own intentional, not accidental conduct, it could not shift responsibility to its insurers.
Back in 2007, another court reached a similar conclusion when Chevron sought to force its insurers to reimburse the company for the compensation it paid to victims of egregious human rights abuses committed on its Yadana gas pipeline project in Burma. The original partner in the project was Unocal Corp., which Chevron had acquired. The abuses were committed by Chevron/Unocal’s partner, the brutal Burmese military, and the compensation was paid to settle the landmark human rights case, Doe v. Unocal in which ERI served as co-counsel. The Court found that the pattern of pipeline abuses alleged by the victims in Doe v. Unocal amounted to “military terrorism,” and therefore Unocal could not be reimbursed.
The Chiquita and Unocal insurance decisions are big victories for those of us working to ensure that multinational corporations avoid complicity in human rights abuses. Why? Because they will affect corporate behavior going forward. If companies that know that their insurers will not pay the costs and damages that result from human rights abuses committed on their behalf, they will have every incentive to make sure these abuses never happen in the first place.