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Presbyterian Church of Sudan v. Talisman Energy

October 2, 2009

THE PRESBYTERIAN CHURCH OF SUDAN, REV. MATTHEW MATHIANG DEANG, REV. JAMES KOUNG NINREW, NUER COMMUNITY DEVELOPMENT SERVICES IN U.S.A, FATUMA NYAWANG GARBANG, NYOT TOT RIETH, INDIVIDUALLY AND ON BEHALF OF THE ESTATE OF HER HUSBAND JOSEPH THIET MAKUAC, STEPHEN HOTH, STEPHEN KUINA, CHIEF TUNGUAR KUEIGWONG RAT, LUKA AYUOL YOL, THOMAS MALUAL KAP, PUOK BOL MUT, CHIEF PATAI TUT, CHIEF PETER RING PATAI, CHIEF GATLUAK CHIEK JANG, YIEN NYINAR RIEK AND MORIS BOL MAJOK, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS,
v.
TALISMAN ENERGY, INC., DEFENDANT-APPELLEE, REPUBLIC OF THE SUDAN, DEFENDANT.



SYLLABUS BY THE COURT

Appeal from a grant of summary judgment in favor of Talisman Energy, Inc. ("Talisman") on Plaintiffs-Appellants' claims under the Alien Tort Statute. The United States District Court for the Southern District of New York (Cote, J.) held that to establish accessorial liability for violations of the international norms prohibiting genocide, war crimes, and crimes against humanity, plaintiffs were required to prove, inter alia, that Talisman provided substantial assistance to the Government of the Sudan with the purpose of aiding its unlawful conduct. We agree, and affirm dismissal on the ground that plaintiffs have not established Talisman's purposeful complicity in human rights abuses.

The opinion of the court was delivered by: Dennis Jacobs, Chief Judge

Argued: January 12, 2009

Before: JACOBS, Chief Judge, LEVAL and CABRANES, Circuit Judges.

Plaintiffs-Appellants are Sudanese who allege that they are victims of human rights abuses committed by the Government of the Sudan in Khartoum ("the Government") and that Talisman Energy, Inc. ("Talisman"), a Canadian corporation, aided and abetted or conspired with the Government to advance those abuses that facilitated the development of Sudanese oil concessions by Talisman affiliates. Plaintiffs appeal from a judgment of the United States District Court for the Southern District of New York (Cote, J.) dismissing their claims under the Alien Tort Statute ("ATS"), 28 U.S.C. § 1350.

We hold that under the principles articulated by the United States Supreme Court in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the standard for imposing accessorial liability under the ATS must be drawn from international law; and that under international law, a claimant must show that the defendant provided substantial assistance with the purpose of facilitating the alleged offenses. Applying that standard, we affirm the district court's grant of summary judgment in favor of Talisman, because plaintiffs presented no evidence that the company acted with the purpose of harming civilians living in southern Sudan.

It becomes necessary to set out at some length the background of the hostilities in the Sudan; the history of the oil enterprise, its facilities and corporate structure; the security measures taken by the enterprise and by the Government; the injuries and persecutions alleged; and the extent and nature of Talisman's connection to the human rights abuses.

BACKGROUND

A. Civil War in the Sudan

At the time Sudan obtained its independence from Britain and Egypt in 1956, civil war broke out between the Arab-dominated Islamic regime in the north, and the non-Muslim African population in the south.*fn1 In 1972, the two sides reached a power-sharing agreement in Addis Ababa, Ethiopia, after which relative stability ensued until an anti-Government uprising in 1983.

In 1991, southern rebels fractured, and the factions fought the Government and each other, with large-scale displacement and death among civilians.

In April 1997, the Government signed the Khartoum Peace Agreement ("KPA") with several (but not all) of the southern rebel groups. The KPA provided for religious freedom, a cease-fire, sharing of resources and power between the north and south, creation of a "Coordinating Council" of factions in southern Sudan, and the consolidation of most of the rebel militias into the South Sudan Defense Force ("SSDF"), which was aligned with the Government, but with a measure of autonomy and control in the south. The benefits of this agreement were short-lived: the SSDF split into warring factions by 1998, and competing militia groups continued fighting each other and the Government. This violence continued throughout the time that Talisman operated in the Sudan.

B. Oil Development in the Sudan

After Chevron discovered oil in southern Sudan in 1979, the Government granted development rights to foreign companies for six numbered "blocks."

In August 1993, a Canadian company named State Petroleum Company ("SPC") purchased the rights to develop blocks 1, 2, and 4. In 1994, SPC was acquired by, and became a wholly owned subsidiary of, another Canadian company, Arakis Energy Corporation ("Arakis").

In December 1996, SPC formed a consortium with three other companies: China National Petroleum Corporation ("CNPC"), Petronas Carigali Overseas SDN BHD ("Petronas"), and Sudapet, Ltd. ("Sudapet") (collectively "the Consortium"), which were wholly owned by China, Malaysia, and the Republic of the Sudan, respectively. The Consortium members signed agreements among themselves and with the Government concerning oil exploration, production, and development, as well as the construction of a pipeline from the Consortium's concession area to the Red Sea. More than half of the Consortium's profits accrued to the Government.

The Consortium members conducted operations through a Mauritius corporation, called the Greater Nile Petroleum Operating Company Limited ("GNPOC"), which was owned 40% by CNPC, 30% by Petronas, 25% by SPC, and 5% by Sudapet.

C. Talisman's Purchase of Arakis

In October 1998, Talisman acquired Arakis and its 25% stake in GNPOC. The purchase of Arakis was effectuated through Talisman's indirect subsidiary, State Petroleum Corporation B.V., which was later renamed "Talisman (Greater Nile) B.V." ("Greater Nile") on December 10, 1998. Greater Nile was a wholly-owned subsidiary of Goal Olie-en-Gasexploratie B.V., which at the time was wholly owned by British companies. The British companies were wholly owned subsidiaries of Talisman Energy (UK) Limited, which was a direct and wholly owned subsidiary of Talisman.

Before purchasing Arakis, Talisman engaged in several months of due diligence: meetings between senior Talisman executives and governmental and security officials in the Sudan; conversations with GNPOC employees and visits to GNPOC development sites; reports on security conditions in the country; roundtable discussions in Canada with representatives of non-governmental organizations, church groups, and other stakeholders; and consultations with representatives of the British government, which controlled the Sudan in condominium with Egypt from 1899 to 1956.

Among their many meetings, Talisman CEO Jim Buckee and other Talisman officers met with Riek Machar ("Machar"), then the First Assistant to the President of the Sudan and head of the Southern Sudan Coordinating Council ("SSCC") and the SSDF. Sudanese officials, including Machar and Unity State Governor Taban Deng Gai, provided assurances concerning safety, security, and peace.

Robert Norton, the head of security for Arakis in the Sudan from 1994 to 1998, advised Talisman that the oil fields were protected both by the military and by Government-sponsored militias. Norton opined that, though Talisman's assistance would greatly advance oil exploration, it would tip the military balance in favor of the Government. Norton believed that Talisman should not invest in the Sudan.

A representative of Freedom Quest International also discouraged Talisman from investing in the Sudan, warning senior Talisman officials that GNPOC and the Government used the Sudanese military to expel civilian populations from villages in order to create a "cordon sanitaire" ("buffer zone") around oil fields.

D. Security Arrangements for GNPOC

Because GNPOC's operations took place amidst civil war, security arrangements were made for Consortium personnel in coordination with the Government and military forces. Plaintiffs contend that these arrangements resulted in the persecution of civilians living in or near the oil concession areas.

In May 1999, GNPOC and the Government built all-weather roads traversing the oil concession areas and linking the concessions to military bases. To protect GNPOC's employees and equipment, these roads served the dual purposes of moving personnel for oil operations and facilitating military activities. According to plaintiffs, these roads enabled the military to operate year-round in areas prone to seasonal flooding, enhancing the military's ability to launch attacks.

In 1999-2000, GNPOC upgraded two airstrips in the concessions--Heglig and Unity--for the safety and convenience of GNPOC personnel. The improvements also had the effect of supporting military activity, because the Government began using the airstrips to supply troops, take defensive action, and initiate offensive attacks.

Heglig, in particular, was used extensively by the military. Talisman employees saw outgoing flights by helicopter gunships and Antonov bombers. One Talisman security advisor observed 500-pound bombs being loaded on Government-owned Antonov bombers at Heglig and regular bombing runs from the airstrip. At both Heglig and Unity, GNPOC personnel refueled military aircraft, sometimes with GNPOC's own fuel.

During the time that Greater Nile was a member of the Consortium, it employed former soldiers as security advisors who traveled throughout the concession areas, coordinated with Mohammed Mokhtar (the former Sudanese Army colonel who served as head of GNPOC security), and wrote detailed reports for senior Talisman officials.*fn2

Talisman CEO Buckee was aware of the military's activities from GNPOC airstrips. In February 2001, he wrote to Sudanese Minister of National Defense Major General Bakri Hassan Saleh urging restraint in the Government's military activities and warning that whatever "the military objectives may be, the bombings are [universally] construed as violations of international humanitarian law." Greater Nile employees expressed concern to Mokhtar and Government officials about bombers and helicopter gunships using the airstrips.

Notwithstanding occasional breaks, the military continued to use the facilities. After a missile attack on the Heglig facility in August 2001, Buckee dropped his objection to the presence of helicopter gunships, and a Greater Nile security officer wrote to the Government emphasizing the need for security at GNPOC's facilities.

E. Buffer Zone Strategy

At the heart of plaintiffs' complaint is the allegation that the Government created a "buffer zone" around GNPOC facilities by clearing the civilian population to secure areas for exploration. Witness testimony and internal Talisman reports show evidence of forced displacement. For example, a 2002 Greater Nile report describing the "buffer zone" around the Heglig camp explained that "[t]he remaining nomads... are being 'encouraged' to complete their move through the area as soon as possible. The area within the security ring road while not a sterile area as found on security operations elsewhere... is moving in that direction." A 1999 security report stated that "[t]he military strategy, driven it appears by the GNPOC security management, is to create a buffer zone, i.e. an area surrounding both Heglig and Unity camps inside which no local settlements or commerce is allowed."

F. Greater Nile Inquiry into Expanding its Exploration Area

Greater Nile explored options for drilling new wells within GNPOC's concession, but outside the small area secured by the military in which production was ongoing. Greater Nile considered expanding exploration notwithstanding its knowledge of the Government's buffer zone strategy. According to plaintiffs, decisions about where to explore "were based upon technical analysis of geological formations performed by Talisman employees in Calgary," without regard to the human consequences of expansion.

G. Plaintiffs' Injuries

The individual plaintiffs remaining in the case consist of current or former residents of southern Sudan who were injured or displaced by Government forces in attacks on communities in Blocks 1, 2, and 5A. The plaintiffs were subjected to assaults by foot soldiers, attackers on horseback, gunships, and bombers. They testified at depositions, with varying degrees of certainty, as to whether the attacks were perpetrated by the Government.

The Presbyterian Church of Sudan asserts claims based on the destruction of its churches by the Government. Plaintiffs Rev. James Koung Ninrew, Chief Tunguar Kueigwong Rat, and Chief Gatluak Chiek Jang testified to seeing churches burned in the Government's attacks.

H. Procedural History

In November 2001, the Presbyterian Church of Sudan and four individual plaintiffs purporting to represent a class of thousands of southern Sudanese filed a complaint against Talisman in the United States District Court for the Southern District of New York. Plaintiffs filed an amended complaint in February 2002 naming additional plaintiffs and adding the Government as a defendant. Plaintiffs' amended complaint alleged that Talisman (1) directly violated, (2) aided and abetted the Government of Sudan in violating, and (3) conspired with the Government of Sudan to violate customary international law related to genocide, torture, war crimes, and crimes against humanity. Plaintiffs subsequently abandoned the claim of direct liability and elected to proceed against Talisman only on the claims of aiding and abetting and conspiracy.

1. Talisman's Motions to Dismiss

The case was initially assigned to Judge Allen Schwartz. In March 2003, Judge Schwartz issued a lengthy decision denying Talisman's motion to dismiss on numerous jurisdictional grounds. Presbyterian Church of Sudan v. Talisman Energy, Inc., 244 F. Supp. 2d 289 (S.D.N.Y. 2003).

The case was reassigned to Judge Denise Cote after Judge Schwartz died in March 2003. Plaintiffs filed a Second Amended Class Action Complaint in August 2003, which added plaintiffs.*fn3

After the Supreme Court's decision in Sosa, and our decision in Flores v. Southern Peru Copper Corp., 414 F.3d 233 (2d Cir. 2003), defendants moved for judgment on the pleadings arguing that the decisions changed the landscape for ATS claims and required reconsideration of the conclusions that [i] corporations can be liable for violating the ATS, and [ii] accessorial liability is recognized under the ATS. By decision dated June 13, 2005, the district court denied Talisman's motion. Presbyterian Church of Sudan v. Talisman Energy, Inc., 374 F. Supp. 2d 331 (S.D.N.Y. 2005).

Talisman again moved for judgment on the pleadings based on a letter from the United States Attorney, with attachments from the Department of State and Embassy of Canada expressing concern with the litigation. Presbyterian Church of Sudan v. Talisman Energy, Inc., No. 01 Civ. 9882(DLC), 2005 WL 2082846, at *1 (S.D.N.Y. Aug. 30, 2005). The Department of State advised that "considerations of international comity and judicial abstention may properly come into play" in view of Canada's objections to the litigation and the United States government's determination that Canadian courts were capable of adjudicating plaintiffs' claims. Id. at *2. Canada argued that the court's exercise of jurisdiction [i] infringed on its sovereignty, [ii] chilled its ability to use "trade support services as 'both a stick and carrot in support of peace,'" and [iii] violated traditional restraints on the exercise of extraterritorial jurisdiction. Id. at *1-2.

In August 2005, the district court denied Talisman's motion. Id. at *9. As to dismissal on comity grounds, the court found an insufficient nexus between Canada's foreign policy and the specific allegations in the complaint because the litigation did not require judging Canada's policy of constructive engagement with the Sudan, but "merely" judging "whether Talisman acted outside the bounds of customary international law while doing business in Sudan." Id. at *5-8. The court also observed that Canadian courts are unable to consider civil suits for violations of the law of nations. Id. at *7.

As to dismissal on political question grounds, the court emphasized that the State Department letter did not explicitly declare that the lawsuit would interfere with United States policy toward the Sudan or Canada, and the court concluded therefore that exercising jurisdiction would not unduly intrude on the authority of the executive branch. Id. at *8.*fn4

2. Motions to Amend and for Summary Judgment

In April 2006, plaintiffs filed a Proposed Third Amended Class Action Complaint. Later that month (before the district court ruled on plaintiffs' motion), Talisman moved for summary judgment as to all claims. On September 12, 2006, the district court granted Talisman's motion. See Presbyterian Church of Sudan v. Talisman Energy, Inc., 453 F. Supp. 2d 633 (S.D.N.Y. 2006).

The district court first considered whether international law recognized conspiracy liability. The court held that "the offense of conspiracy is limited to conspiracies to commit genocide and to wage aggressive war" and that international law does not recognize the doctrine of liability articulated in Pinkerton v. United States, 328 U.S. 640, 646-47 (1946). Presbyterian Church of Sudan, 453 F. Supp. 2d at 663, 665. The court observed that plaintiffs never brought a claim for "wag[ing] aggressive war" and that they had abandoned their genocide claim. Id. at 665. Nonetheless, the court addressed the genocide claim and held that plaintiffs could not be made liable for a coconspirator's conduct solely because that conduct was foreseeable. Id.

The district court next considered plaintiffs' claim that Talisman aided and abetted genocide, war crimes, and crimes against humanity. The court undertook to define the elements of aiding and abetting liability under the ATS, and concluded that they must be derived from international ...


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