8th Circuit Hears Arguments on Whether US-Peru TPA Bars Environmental Damage Suit

Judges at the U.S. Court of Appeals for the 8th Circuit questioned the claim that the U.S.-Peru Trade Promotion Agreement bars a class-action lawsuit against U.S. companies and their officials. The suit, brought by Peruvian citizens, alleges that a mineral smelting and refining complex in Peru caused environmental damage, harming the individuals (Sr. Kate Reid v. The Doe Run Resources Corp., 8th Cir. # 23-1625).

In a bid to get the case tossed from a Missouri district court, the defendants, led by the New York-based Doe Run Resources Corp. and including Peruvian firm Renco Group, said the TPA prevents the claim and that the suit belongs in Peru. Oral argument was held on the motion to dismiss on Jan. 9, during which the judges heard the companies' claim and the Peruvian individuals' effort to defeat the motion.

E. Joshua Rosenkranz of Orrick & Herrington, counsel for Doe Run, said the TPA lays out exactly how environmental claims are supposed to be adjudicated, pointing to the agreement's Article 18.4, which says the U.S. is to enforce and provide remedies for domestic violations of its environmental laws. "It explicitly contemplates lawsuits exactly like this and says that they belong in the country where the tort occurs," Rosenkranz said.

Anyone harmed by a violation of a country's environmental laws will have a right "to sue another person under that party's jurisdiction for damages under that party's laws," the attorney noted. Nothing in Article 18 shall be found to empower a party's authorities to undertake environmental law enforcement activities in another party's territory, Rosenkranz said, adding that this suit is "nothing short of an environmental law enforcement activity over a facility in another country." Rosenkranz added that Peru's interests here "vastly outweigh Missouri's interests," promoting dismissal of the case on international comity grounds.

Joshua Branson of Kellogg & Hansen, counsel for the Peruvian citizens, replied that the text of the TPA "says nothing about private tort suits or dictating the forum for such tort suits." The attorney spent time during the oral argument differentiating the suit from prior cases in which international agreements have purposely established exclusive forums for the resolution of civil claims. In this case, the TPA was not meant to establish any such system, and in fact, says the opposite, Branson argued.

"The implementing statute makes clear that Congress did not intend the TPA to be used as any sort of defense in private litigation," Branson said. Doe Run says its argument isn't a defense since it discusses the forum and not the merits, but it's incorrect, the attorney argued. "That's also true of personal jurisdiction, and we would all consider that as a defense," but "more importantly the defendants" called their claim a defense in their answer.

Branson added that "none of the [TPA's clauses] say with any sort of specificity whatsoever that the party's intent was to regulate the forum for private tort suits and in many respects, they say the opposite." In applying the doctrine of international comity, the defendants cannot find the "sort of foreign policy calamity that they need to win on the basis of a vague commitment to Peruvian sovereignty," he argued. "When you read the structure of chapter 18, it's clear that the point of chapter 18 was to raise environmental standards. It was not to provide a free standing bar to common law tort suits."

Branson said the trial court properly carried out a choice of law analysis under Missouri laws' rules and found that Peruvian and Missouri laws do not conflict in this case.

Simon Lester, former WTO official, said in a blog post that most international trade experts would find that the TPA was not meant to divide up sovereign interests pertaining to the environment on the basis of territory nor "access to the courts on tort matters." It is "axiomatic" that foreign states have sovereign interests related to the environment without trade deals affirming as much, and while the TPA ensures that Peru has a court system that allows environment-related tort claims, this was because the U.S. "was worried about competition and a race to the bottom" and not an "expression of foreign policy preference about litigation location," Lester said.

Parties can be "certain that a court exercising jurisdiction over this case in Missouri under Missouri tort law does not constitute a 'derogation' by the United States of the U.S.-Peru TPA," the post noted.