The federal civil rights challenge to oil giant UNOCAL, first hailed as a landmark case that could influence the conduct of business throughout the world, foundered in federal court this week.

U.S. District Judge Richard Paez declined on Monday to issue an injunction barring further investment by UNOCAL in Burma, where the El Segundo–based multinational is building an oil pipeline in partnership with the State Law and Order Restoration Council (SLORC), the widely boycotted military junta. Moreover, according to UNOCAL attorneys and officials, work on the pipeline is nearly complete, meaning subsequent decisions in court will have little impact on the $1.2 billion Yadana gas-pipeline project in Burma.

In his ruling, Paez held that plaintiff attorneys, including lawyers from the Center for Constitutional Rights in New York and the Pasadena firm Hadsell & Stormer, had failed to prove that the injunction would redress abuses inflicted by SLORC.

Brought on behalf of 14 individual villagers living in the area of pipeline construction, the suit seeks to hold UNOCAL liable for alleged human-rights abuses committed by SLORC soldiers — including murder, rape, torture and forced labor. Plaintiffs charge that the perpetrators acted with UNOCAL’s knowledge, and that UNOCAL directly profited from such actions.

UNOCAL, which sold its local gas stations last year to focus on international oil exploration, has faced widespread criticism for its dealings in Burma. Paez ruled last spring that the firm could be held liable for punitive damages for their involvement (or complicity, as plaintiffs allege) in SLORC misconduct. In May, when the Clinton administration issued sanctions barring investment by U.S. companies in Burma, UNOCAL was clearly a target, although the Yadana pipeline was exempt as work had already gotten under way.

UNOCAL spokesman Barry Lane felt Judge Paez had vindicated UNOCAL with Monday’s decision. “The decision speaks for itself.” In fact, Lane said, the company is presently “in development on offshore drilling and platforms” in Burma. Lane implied further that UNOCAL is considering future investments with SLORC, although, he said, “We haven’t announced anything officially.”

Lane portrays the suit as a case of too little, too late. The preliminary injunction sought to bar UNOCAL investment, but according to Lane, work on the pipeline has long been completed. “If there were any expenditures on the pipeline, they would be minimal at this point.” UNOCAL’s French partner Total, which is also named in the suit, operates the pipeline independently. The pipeline is scheduled to begin moving oil on July 1.

However, Paez’s ruling “doesn’t change the issues,” according to plaintiff attorney Anne Richardson. “The judge made it clear that this was a preliminary ruling, and that he was only denying [the injunction] because of the preliminary status. Now we’re going full-bore on the damages claim and on a permanent injunction,” said Richardson. “If damages are eventually awarded, that simple fact will have enormous repercussions across the world. If you become partners with human-rights violators and you know about it, you can be held liable. That part of the case remains 100 percent viable.”

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