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Does
a Presidential Iraq Executive Order Take Away Tort Victims' Right To Sue?
Protecting
Halliburton at the Expense of Injured Workers
By
ANTHONY J. SEBOK AND CLAIRE R. KELLY
OpEdNews.Com
In
May, President Bush issued Executive Order 13303 ("EO 13303").
Previously little noticed, EO 13303 is now receiving scrutiny from
watchdog groups. They fear that it may be used to limit the accountability
of corporations doing business in Iraq.
Their
fears are reasonable, as we will explain. In particular, it is possible
the Executive Order will be used to cut off tort victims' ability to sue
corporations working in Iraq.
And
that's not the only problem with the Executive Order; there are two
others. First, EO 13303 sets a terrible precedent for the abuse of the
executive's power over private litigation in the context of national
security. Second, it is yet another example of what Professor
Sebok has described on this site as the Republican
penchant for "sneaky tort reform."
What
the Executive Order Says
EO
13303 is entitled, "Protecting the Development Fund for Iraq and
Certain Other Property in Which Iraq Has an Interest." It prohibits
all judicial process -- including, but not limited to, "attachment,
judgment, decree, lien, execution, [and] garnishment" -- with respect
to the Development Fund for Iraq and all interests in Iraqi oil products.
The
language describing the latter category -- interests in Iraqi oil products
-- is very broad. It encompasses not only the oil and the interests, but
also all "proceeds, obligations, or any financial instruments . . .in
which any foreign country or a national thereof has any interest, that are
in the United States, that hereafter come within the United States, or
that are or hereafter come within the possession or control of United
States persons."
Put
simply, this means that no court or litigant can touch any of the oil
products, interests in them, or proceeds. And in effect, it also means
that it is useless to sue any company or person to try to get any of this
-- for even if a court were to issue an opinion saying you were entitled
to it, that holding could never be enforced. (Indeed, the order explicitly
says that a creditor cannot collect on a legally enforceable claim arising
from Iraqi oil production.)
How
the Executive Order May Be Interpreted
What
else does EO 13303 do, besides making claims arising from Iraqi oil
production unenforceable? Arguably, it may also prohibit a plaintiff from
bringing a tort claim for damages caused by a company's negligence in a
project arising from Iraqi oil production.
That
would apparently be true even if the company (say, Halliburton), and the
accident victim (say, an American worker working for an independent
subcontractor) were American, and if the victim tried to sue in a U.S.
court (say, in Texas.) And that leads to an unfortunate anomaly.
The
same worker might get a multimillion-dollar verdict in the U.S. if he had
been injured here. But by going to Iraq, to work there, he may not be able
to recover a dollar in court, and be at the mercy of Halliburton's
decision as to how much -- or even whether -- to compensate him.
Some
have suggested that the Executive Order was prompted by recent Alien Tort
Claims Act (ATCA) suits, and the resulting fear that American companies in
Iraq could be sued in U.S. Courts by Iraqis or other foreign citizens
invoking the ATCA. Under the Executive Order, even if such suits are
brought, there can be no enforcement against the categories of property
the Order lists.
One
can argue about whether that is, or is not a good idea. But one thing is
certain: The Executive Order goes much further than simply preventing ATCA
suits by foreign citizens. It also appears to prevent ordinary tort
suits, by ordinary Americans, who happen to be working in Iraq to rebuild
the country -- as America has called upon them to do.
And
that is the "sneaky tort reform" aspect of the Executive Order:
It gives to a small set of corporations the sort of tort reform that they
have not been able to get past the Senate for years. Halliburton doubtless
wishes it could insulate itself from tort suits in the United States. With
respect to its Iraq operations, at least, it has gotten its wish.
Historical
Precedents: Similar Measures by Past Presidents
Is
the Executive Order valid? Certainly, Presidents and executive agencies
have issued similar orders in the past, justifying their actions by
invoking the
International Emergency Economic Powers Act (IEEPA).
For
example, following the Iranian Hostage Crisis, President Carter blocked
Iranian assets in the U.S. After he did, the Treasury Department limited
judicial process with respect to any non-Iranian interest in property --
meaning that, if Iran owed you money, you were out of luck, even though
you had nothing at all to do with the hostage crisis. (Carter subsequently
also ordered the transfer of all Iranian assets in the U.S. to the Federal
Reserve Bank in New York.)
President
Reagan followed up with an executive order suspending the enforcement, in
the United States, of all claims that were to be presented to the
U.S.-Iran Claims Tribunal.
Both
Carter and Reagan's orders were challenged, before the U.S. Supreme Court,
in Dames &
Moore v. Regan. To defend the orders, they invoked both
IEEPA, and another federal statute, the
Hostage Act. (In contrast, President Bush's recent Order
invokes not only IEEPA, but also the
National Emergencies Act; section 5 of the
United Nations Participation Act (UNPA); and 3
U.S.C. 301.)
The
Supreme Court found that in IEEPA and the Hostage Act, Congress had
provided specific authorization for Carter's nullification of non-Iranian
interests in the Iranian property in the U.S., and for Carter's decision
to transfer Iranian assets to the Federal Reserve.
But
what about Reagan's suspension of claim enforcement? There, the Court
found no specific statutory authority. But it did find that -- as
evidenced by the relevant statutes -- Congress had intended to grant the
President broad discretion in this area.
Indeed,
more than this, the Court found that Congress also intended to invite the
President to act independently of Congress, especially in areas where
there is a history of congressional acquiescence. And in the area of
executive claim settlement, the Court held, there was such a history. In
many instances, it pointed out, sovereigns had sought to settle the claims
of their nationals.
For
all these reason, the Court upheld the actions of both Presidents. But
would the same result occur if the Court were to review President Bush's
recent Executive Order? That is a more difficult question.
The
Key Question: Does the Order Divest the Courts of Jurisdiction?
In
Dames & Moore, the
Court stressed that the claim suspension order did not "divest the
federal court of 'jurisdiction' " -- it only imposed a temporary
delay while jurisdiction was resolved. So suppose it was decided that the
Iran-U.S. Claims Tribunal did not have jurisdiction over a claim. Then the
claim could be brought in U.S. court after all.
What
about President Bush's Executive Order? Does it "divest the federal
court of jurisdiction," or not? Arguably, it does, for two reasons.
First,
while it prohibits the transfer of Iraqi property, just as Reagan's
claim suspension order did, it also goes further -- to prohibit process
against persons, too. If the products and interests at issue
"come within the possession or control of United States
persons," they are protected. When the court can't hear a suit
against a particular person, it has arguably been divested of jurisdiction
over that potential defendant. (Indeed, the U.S. Constitution defines some
of the Supreme Court's own original jurisdiction based on who the parties
are in the case.)
Second,
President's Bush's Executive Order, unlike President Reagan's does not
merely suspend claims -- it purports to extinguish them entirely. There is
no alternative tribunal at which the claimant may find justice. He or she
is simply out of luck.
The
Argument For Extinguishing, Rather Than Suspending, Claims Is Weak
It
might be reasonable for the government to suspend claims against Iraqi oil
products and related interests. After all, Iraq is in transition, and is
being rebuilt. But what is the justification for extinguishing these
claims entirely?
To
begin, it's important to note that Congress has not expressly authorized
the measures contained in the Executive Order. If it had, that might be a
different matter, for several reasons.
First,
the Constitution gives Congress power to "constitute tribunals
inferior to the Supreme Court." Under this power, it long ago created
the federal courts. And along with the power to create these courts, comes
at least some power to limit their jurisdiction.
Second,
proposed Congressional legislation is subject to public debate, and the
legislative process. An Executive Order --which is simply a directive
signed by the President -- is not. Thus, with respect to the recent
Executive Order, Vice President Cheney did not have to take any flak in
Congress for giving a break to his old company, Halliburton, before the
Executive Order was issued; in Congress, in contrast, it might have been a
different story.
Apart
from the question of whether Congress or the President should have done
this, moreover, there is also the question of whether it should be done at
all. Perhaps some protection of Iraq-related property and interests might
have been offered in exchange for Saddam Hussein's willing exile. But that
didn't happen.
Instead,
the reason for the Executive Order seems more connected to domestic than
international politics. Its apparent impact, as noted above, will be to
shield U.S. companies from suits brought by U.S. citizens -- including
accident victims who may have been grievously injured -- in U.S. courts.
Why
stop these suits? The real reason for it, it seems to us, is simple: To do
so, lowers the cost of reconstruction.
From
the companies' perspective, it is as if they've received a tax break to
companies who do business in Iraq. Giving such tax breaks might -- or
might not -- make sense.
But
from tort victims' perspective, the effect of the Executive Order is very
different. Rather than making every taxpayer pay for Iraqi reconstruction,
it makes tort victims, among others, pay. That is a grave injustice -- for
accident victims are the least appropriate persons to pick out to bear the
lion's share of a financial burden. The money taken out of their pockets
may be for medical treatment, rehabilitation, and other genuine,
important, and perhaps desperate needs.
This
article originally appeared in Findlaw.com
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