Unocal will settle a human-rights case filed over a 1990s pipeline in Southeast Asia by paying villagers and funding improvements to living conditions along the project route...

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LOS ANGELES — Unocal will settle a human-rights case filed over a 1990s pipeline in Southeast Asia by paying villagers and funding improvements to living conditions along the project route, lawyers on both sides said yesterday.

The settlement will compensate 14 anonymous villagers who sued Unocal in 1996, alleging it should be held liable for enforced labor, murder and rape allegedly carried out by the Myanmar military during construction of the $1.2 billion Yadana pipeline in the country also known as Burma.

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The suits have been considered a key test for human-rights activists trying to hold multinational corporations responsible in U.S. courts for alleged atrocities abroad.

El Segundo-based Unocal also will provide funds to improve living conditions, health care and education in the pipeline region.

“These initiatives will provide substantial assistance to people who may have suffered hardships in the region,” attorneys said in the joint statement.

Unocal also will enhance its educational programs to reaffirm its commitment to human rights, the statement said.

Further details of the settlement, which was still being negotiated, were kept confidential.

The statement was released on behalf of Unocal’s legal team and plaintiffs’ attorneys from EarthRights International, the Center for Constitutional Rights and the International Labor Rights Fund.

“We are completely delighted, and there is great satisfaction that the matter has been resolved in this way,” said Terry Collingsworth, general counsel for the Washington, D.C.-based International Labor Rights Fund.

The full panel of the 9th U.S. Circuit Court of Appeals had been scheduled to hear arguments on the case yesterday in Pasadena, but the hearing was canceled at the request of Unocal and the plaintiffs.

The federal court set a Feb. 1 11 deadline for a joint status report on whether a settlement had been completed.

The settlement would resolve claims against Unocal filed in federal and state courts.