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Viewing cable 06MANAGUA440, IMPASSE ON DBCP LAWSUITS UNDER NICARAGUA'S SPECIAL
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| Reference ID | Created | Released | Classification | Origin |
|---|---|---|---|---|
| 06MANAGUA440 | 2006-02-27 21:53 | 2011-08-19 20:00 | CONFIDENTIAL | Embassy Managua |
VZCZCXRO0609
OO RUEHLMC
DE RUEHMU #0440/01 0582153
ZNY CCCCC ZZH
O 272153Z FEB 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5406
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE IMMEDIATE
RUEHBO/AMEMBASSY BOGOTA IMMEDIATE 1346
RUEHCV/AMEMBASSY CARACAS IMMEDIATE 0554
RUEHQT/AMEMBASSY QUITO IMMEDIATE 0438
RUEHDG/AMEMBASSY SANTO DOMINGO IMMEDIATE 0501
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC IMMEDIATE
C O N F I D E N T I A L SECTION 01 OF 04 MANAGUA 000440
SIPDIS
SIPDIS
FOR WHA/CEN, WHA/EPSC, EB/CBA, L/CID, L/EB
E.O. 12958: DECL: 02/25/2016
TAGS: EINV ETRD KIDE KIPR CVIS PREL BEXP NU
SUBJECT: IMPASSE ON DBCP LAWSUITS UNDER NICARAGUA'S SPECIAL
LAW 364
REF: A. A) 00 MANAGUA 464
¶B. B) 01 MANAGUA 1622
¶C. C) 02 STATE 20261
¶D. D) 02 MANAGUA 655
¶E. E) 02 MANAGUA 2984
¶F. F) 02 MANAGUA 3282
¶G. G) 04 MANAGUA 992
¶H. H) MANAGUA 411
Classified By: Ambassador Paul A. Trivelli; Reasons 1.4 (d), (e)
¶1. (C) Summary: In Embassy,s view, the only way out of the current impasse over Special Law 364, which targets U.S. companies in Nicaragua for past use of the pesticide DBCP on banana plantations, is through a negotiated political resolution. However, such a resolution will be very difficult to obtain given the current political climate. Absent the prospect of alternative compensation, there is virtually no chance that the inequitable Law 364 will be modified. The lower courts will consequently continue to pile up unenforceable judgments, with the danger that some third country may eventually decide to apply them against the assets of the defendants. There is virtually nothing that the Bolanos government can do to resolve the issue in absence of political will from the legislative and judicial branches. USG leverage is minimal. Extreme punitive actions (denying a section 527 waiver, ejecting Nicaragua from DR-CAFTA, putting Millennium Challenge Account program on hold) in our view would harm the wrong people and likely not lead to any change in GON policy, while seriously compromising USG policy towards Nicaragua. Use of targeted visa revocations against the judges in Law 364 cases is problematic, unlikely to influence the court decisions, and could potentially damage USG interests. Moreover, the plaintiff groups enjoy widespread popular sympathy. While their claims to injury from exposure to DBCP -- or even their claims to have worked on banana plantations -- may be false, in the public eye, this issue is personified by a group of poor, mostly elderly, peasants in failing health, who camp out annually in front of the seat of power vainly seeking redress. End summary.
Background
----------
¶2. (C) Special Law 364 "For Judicial Cases Brought by People Affected by the Usage of DBCP-based Manufactured Pesticides" was drafted to force the hand of international companies involved in the production, distribution and use of DBCP chemicals to compensate banana workers. Companies that had in the past argued "forum non conveniens" to reject class action suits in U.S. courts, would instead be confronted by a local law that will increase very substantially the financial burden of defending a case in Nicaraguan courts. Promoted by FSLN deputies beginning in 1999, the law was recognized by many to be seriously flawed, yet nevertheless adopted by overwhelming majority (reportedly then-President Arnoldo Aleman supported it) and promulgated in January 2001. (refs a-d)
¶3. (C) The new Bolanos government was initially prepared to facilitate an amendment to Law 364 with input from company lawyers, and with the encouragement of the USG the then acting Attorney General Francisco Fiallos issued a non-binding opinion in 2002 that the law was unconstitutional. However, when the GON faced bipartisan political pressure in support of banana workers allegedly harmed by use of DBCP, including an October, 2002, march of 1500 protesters, the GON withdrew the opinion and issued a statement expressing solidarity with the workers and denying any intention to promote efforts to overturn Law 364. The GON also felt that the companies had been insufficiently forthcoming on an alternative claims settlement mechanism (refs e-f). The Supreme Court subsequently issued a statement affirming the constitutionality of Law 364.
¶4. (C) As unenforceable judgments piled up in the Nicaraguan court system with no relief in sight for the 17,000 plaintiffs, the Bolanos administration, by then at political odds with the main political forces in the country, found it had limited options to craft a solution. In March 2004, after protesting banana workers staged a march from Chinandega and camp-in outside the Presidency, former Agriculture Minister Navarro was named to head a GON commission on the issue, but he found it impossible to persuade the warring plaintiffs groups to agree on a common strategy (ref g). Navarro told Econ Counselor in September 2004 that prospects of encouraging the various groups of plaintiffs to agree on a settlement were almost nil and the lawyers would resist any realistic deal. Navarro said that he had proposed a solution modeled on the Bhopal settlement, with the government stepping in to negotiate on behalf of individual claimants, but that would take a National Assembly decision to impose, and in the then political climate (which has only worsened in the intervening year and a half) such a solution would prove impossible. Navarro also suggested that PAHO or WHO be asked to author an expert opinion on what diseases are actually caused by DBCP.
¶5. (C) In early 2005, banana workers again marched from Chinandega and camped outside the National Assembly. They were persuaded to pull up stakes (coincidentally just before the rainy season started) after the GON promised to assist them with medical care and to help a group of plaintiffs who had been called to be deposed in California (Jose Adolfo Tellez, et al. v. Dole Food Company, Inc., et al) obtain travel documents and U.S. visas. At the request of the Foreign Ministry, and with the encouragement of Dole representatives who said that it would be beneficial to their case to have the plaintiffs examined in the United States, the Consulate agreed to give the visa applications every consideration appropriate under U.S. law. The Consul General personally interviewed over thirty applicants in April, 2005, and was able to grant visas to all but a few. (Note: according to the Dole lawyer in Nicaragua, all the travelers duly returned).
¶6. (C) For its part, the National Assembly continued to take
public positions -- but provide little concrete assistance --
on behalf of the banana workers. A September 2005 resolution
reaffirmed the Assembly,s determination to take no action to
amend or repeal Law 364 until the law's mandate and
objectives have been completely fulfilled.
Section 212f problematic
------------------------
¶7. (C) Use of Section 212f for findings of visa ineligibility is not likely to be a viable lever for resolving issues related to Law 364 for a variety of reasons. Most Nicaraguan judges are affiliated with the Sandinistas and have no interest in travel to the United States. For example, consular records show that Judge Vida Benavente, the lower court judge who has authored several multi-million dollar findings against Dole, Dow and Shell, has never had a U.S. visa, nor has Judge Socorro Toruno Martinez, the second magistrate involved, who has ruled on many of the more recent cases. We understand that Department policy is that 212f cases should not be submitted without a visa-related "triggering event." Typically a "triggering event" means that a corrupt individual possesses a valid visa, has demonstrated a pattern of previous travel to the U.S., or has applied for a visa. Judicial corruption has also been, in our experience, much more difficult to document than executive branch corruption in terms of meeting the "reason to believe" standard required for the Department to make a 212f finding. The law 364 rulings are far from being the most egregious cases of judicial corruption.
¶8. (C) Judge Benavente has a long history of involvement in
questionable judicial proceedings relating to land and other
property. While it is very likely that she has committed
acts of corruption and received benefits in return, it is
doubtful whether the Embassy would be able to document her
corruption sufficiently to meet the required standard. For
all of these reasons, 212f is not likely to be a useful tool
with Judge Benavente, nor with any other judges that might be
involved in issuing Law 364 verdicts. Moreover, the public
relations optic of the USG taking away visas of judges who
"dared" to rule against US companies in favor of
"defenseless" Nicaraguan "victims" would certainly not be
positive and could hurt our ability to influence Nicaraguan
events in other areas of USG interest.
Difficulty of Modifying Law 364
-------------------------------
¶9. (C) As a "law of public interest," Law 364 cannot be
modified by agreements between private parties. The rights
conferred by such laws can only be renounced with respect to
individuals who are party to the renunciation. Thus any of
the claimants or claimant groups could accept a settlement
and renounce the rights they obtained under Law 364, but the
law would still be open to use/abuse for anyone who did not
accept a settlement and for new claimants. It would be
legally impossible (though given the cavalier attitude
towards constitutionality of the Nicaraguan political class,
not beyond the bounds of imagination) to overturn the law
absent a declaration of unconstitutionality (which is
unlikely without a political agreement), Assembly approval of
a new and "better" law that conflicts with the current
legislation, or a political deal that the Assembly deemed
more beneficial to current and future claimants. If the
Assembly did somehow modify the law, then previous judgments
would be invalid under Nicaraguan jurisprudence. Also, the
appellate or Supreme Court could overturn the lower court
judgments (again, unlikely without a political deal -- a Dole
appeal has been pending for over a year with no action), but
law 364 does stipulate that compensation should be no lower
than USD 100,000 per person.
Elements of a Political Settlement
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¶10. (C) In the Embassy's view, the only way out of the current impasse is a political deal with an impartial non-judicial arbiter awarding reasonable settlements to plaintiffs who can justify that they worked in banana plantations and have been affected by exposure to DBCP. Claimants would have to renounce their right to further litigation in order to participate. The U.S. handling of victim claims after 9/11 is a good model; the Bhopal settlement arrangement is another. If the Nicaraguan political class, and the plaintiffs, most vocal leaders, accepted such a deal, then it might be possible to form a consensus to overturn Law 364 and/or dismiss all pending cases. However, the current political climate is not conducive to agreement of any kind, and political parties are unlikely to want to alienate large voter blocs in the run-up to the November national election. Thus, such an arbitral program is a medium-term option only. We would point out, however, that any reasonable settlement terms likely to be acceptable to the companies may not produce payoffs sufficient to satisfy the plaintiffs -- who have been promised huge sums -- or their lawyers. Indeed, if the medical tests are administered correctly, and the exposure was as limited as company representatives claim, there might well be very few claimants who qualified. Under those circumstances, most local politicians would rather have the issue fester than seek a solution.
What the status quo entails
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¶11. (C) As things currently stand, over USD 886 million has
been awarded in 17 local actions by two Nicaraguan judges.
One of those courts is expected to issue an additional
judgment on behalf of another 1,708 Nicaraguans who are
seeking an additional USD 3.4 billion. Billions of dollars
in claims are still pending, and new cases continue to be
filed. However, none of the companies -- Dole, Dow Chemical
or Shell Chemical -- maintain business interests in
Nicaragua, nor will they engage in new investment here -- to
the detriment of Nicaragua,s economic growth and the
investment climate in general.
¶12. (C) When the plaintiffs have attempted to enforce the
judgments in the United States, the cases have been routinely
thrown out. Dole and Shell lawyers regularly seek inclusion
of language on the unreliability/corruption of the Nicaraguan
judicial system and inequities of Law 364 in USG public
documents (the National Trade Estimate, Investment Climate
Statement -- and even the Human Rights Report), then cite
these statements as evidence to help their case.
¶13. (C) Recently, the court which awarded the first judgments in 2002 ordered the attachment of trademarks belonging to the companies -- however, in the case of both Shell and Dole, the trademarks in question actually belonged to a different company from the party named in the suits. Dole requested that Nicaragua be placed on the Special 301 Priority Watch List because of this situation. Embassy recommended against such a decision (ref h). The GON,s Registry of Intellectual Property, which accepted the court notification of attachment, regards this as a dispute between civil parties. We are informed by local lawyers that trademark attachments are a fairly common practice in business disputes. While the symbolic value of the attachment is significant (especially when plaintiffs were seen covering over the signs at Shell gas stations in protest), the practical import for Dole in particular seems rather low.
¶14. (C) In our view, there is little immediate threat to the economic interests of the companies from Law 364 either in Nicaragua (where there is little or nothing to attach) or in the United States (where, with the assistance of Embassy reporting, the court system can be relied on to recognize the true merits of the cases). The real danger is that some third country might decide to enforce the Nicaraguan judgments against real company assets. So far, there have been attempts to have judgments enforced in Colombia, Ecuador and Venezuela, but courts there have declined to accept the Nicaraguan rulings. It might be useful for Washington to reinforce the message to those countries -- and perhaps others in Latin America and Europe -- to alert them to the flaws in the Nicaraguan law and judicial procedures.
TRIVELLI