N a watershed case that could affect how multinationals do business in developing countries, a federal appeals court will consider on Tuesday whether the energy giant Unocal should stand trial in connection with human rights abuses that the government of Myanmar is accused of inflicting on villagers during construction of a natural-gas pipeline.

The crucial question before the unusually large panel of 11 judges is whether to apply international legal standards that hold parties responsible for aiding and abetting human rights abuses. The case is in the United States Court of Appeals for the Ninth Circuit in San Francisco.

The plaintiffs are a group of villagers from Tenasserim, a region in southeastern Myanmar, the country once known as Burma. They say Unocal paid the military to provide security for the project and supported the government, which forced villagers to help build the $1.2 billion pipeline in the 1990's and threatened those who refused with rape and other atrocities. Unocal denies the accusations.

If the court allows the civil suit to go to a jury trial, "this will raise the stakes for multinationals that do business with repressive regimes," said William S. Dodge, an international law professor at the Hastings College of the Law in San Francisco. "There are plenty of repressive regimes around the world, and there are plenty of multinationals that do business with them. The question is, how far can a corporation like Unocal go in cooperating with such a regime before the company bears some legal responsibility?"

THE case is among a growing number based on the once-obscure Alien Tort Claims Act, a 1789 law originally intended to help prosecute international pirates in American courts. Since the early 1980's, it has been used to argue cases successfully against foreign military and police personnel accused of human rights abuses. More recently, human rights and labor groups have seized on it to do battle with oil, mining and other multinational companies that work with governments that they say engage in torture, genocide and similar violations of international law.

There have been more than a dozen alien tort cases filed against companies since the mid-1990's, but none have so far gone to a jury trial. Some have been dismissed on procedural grounds, while others are pending. The possibility of trials has raised concerns among both corporations and the Bush administration over potentially embarrassing testimony — and worry that a verdict could set a precedent that encourages thousands of foreign plaintiffs to seek damages for crimes committed by their own governments.

"You get a perfect storm of sympathetic plaintiffs, trial lawyers and anti-globalization activists working together to bring these suits," said William A. Reinsch, the president of the National Foreign Trade Council, an industry group based in Washington. He cites cases like one recently filed against dozens of companies that did business in South Africa under apartheid. "It could be disastrous for global trade," he added.

Though there has not been a single verdict against them, companies are feeling the impact of the litigation, which they must increasingly factor into investment decisions.

"It's causing companies to run away from situations like Burma," said Errol P. Mendes, a law professor at the University of Ottawa and recently a co-author of "Global Governance, Economy and Law" (Taylor & Francis), which details the impact of such lawsuits on multinational companies.

He and others point to a variety of recent corporate decisions to demur or pull back from projects in countries where governments have been accused of human-rights abuses, including Nigeria, Indonesia and Sudan, as well as Myanmar.

Although Unocal, based in El Segundo, Calif., continues to do business in Myanmar, "this has created a great deal of uncertainty about future investing," said Charles O. Strathman, its vice president and chief legal officer. "It's not just the legal fees involved; it's also very disruptive and a big time commitment."

The negative publicity from such cases may be even more costly. Social-justice and environmental groups see the Unocal case as an example of globalization gone bad, inspiring protests on college campuses and campaigns to pressure school administrators to sell Unocal stock.

"Whether these companies prevail in a court of law, they are already losing in the court of public opinion," Professor Mendes said. "Just the launching of these lawsuits has a huge impact on companies' brand equity, which these days is their most important asset."

The suits are just one way to try to bring pressure on companies. In resolutions being put before corporate directors, shareholders are calling for companies to pull out of projects implicated in human-rights lawsuits. For example, after a shareholder resolution and negative publicity from a pending human-rights lawsuit, Talisman Energy in March sold its $770 million stake in an oil development project in Sudan. It had been accused of assisting Sudanese forces in an ethnic cleansing campaign against villagers near its oil fields.

"There was shareholder fatigue" in the investment, said David W. Mann, a senior manager for investor relations at Talisman, which is based in Calgary, Alberta, and listed on the New York Stock Exchange. He denied the suit's accusations.

Although a lawsuit filed against ChevronTexaco by villagers in Ecuador was dismissed last year by a federal judge, the company decided to end its oil development there last fall. The case is now scheduled to be heard in an Ecuadorian court. Various factors led to the decision to leave Ecuador, but the litigation "was not a positive indicator to say this is a place we want to continue to do business," said Edward B. Scott, vice president and general counsel for the company's overseas division. The threat of similar litigation, he said, "adds a further element of risk and makes us less competitive."

SECURITY experts regard such statements as signs that multinational companies based in the United States are increasingly worried about their liability for acts committed by host governments, which have long provided security and other services for their oil, mining and other projects.

While corporate officials emphatically defend their human-rights records overseas, "business leaders are getting very nervous about these lawsuits," said Catherine J. Boggs, a lawyer at Baker & McKensie in Chicago, who advises companies about security arrangements with local governments. "Some think the best way to deal with them is to try to repeal the law altogether, or at least modify it."

To that end, pro-trade groups and the Justice Department filed briefs in May in the Unocal case, arguing that the alien tort statute had been misapplied by plaintiffs and that such lawsuits could undermine American business interests and the war or terrorism. The lawsuit bears "serious implications for our current war against terrorism" and permits similar claims to be easily asserted against allies in that war, an assistant attorney general, Robert D. McCallum, wrote in the government's brief.

Despite increased pressure on judges to support the antiterrorism effort, legal experts say it is unlikely that the court will move to invalidate use of the alien tort statute in the Unocal case. Yet even if it advances to a jury trial, it may be difficult to prove that Unocal actively participated in abuse by Myanmar. "It's not to say that these acts weren't horrible, but the aiding and abetting by Unocal is not obvious," said Anthony J. Sebok, a professor at the Brooklyn Law School who specializes in tort law. "These are difficult allegations to prove because they have to show that Unocal knew precisely how its aid was being used to commit human rights abuses."

Yet company officials worry that the aiding-and-abetting standard, which can include "knowing practical assistance, encouragement or moral support" to the perpetrator of the abuse, is so broad that practically any involvement with the government of Myanmar could be misconstrued as complicity. "The investment itself could be considered moral support or assistance," said M. Randall Oppenheimer, a lawyer at O'Melveny & Myers in Los Angeles, who represents Unocal in the case. "It seems fundamentally unfair to hold people liable for a situation that they don't control."

The plaintiffs argue, however, that Unocal was well aware of the military's poor human rights record in Myanmar and should have known that its security forces would engage in brutal practices, like forcing villagers who lived in the path of the pipeline not only to relocate, but to help build it. Their lawyers cite a 1992 report by consultants who advised the company on the risks of doing business with the government of Myanmar. The report warned that the military "habitually uses forced labor to construct roads."

A lawyer who represents the plaintiffs, Katharine J. Redford of EarthRights International in Washington, said: "Their own consultants told them they could be implicated as a willing partner in the abuse. That's exactly our allegation."

EVEN if the suit fails to prove that such actions amounted to aiding and abetting Myanmar's military, legal experts say that potentially embarrassing evidence made public during a jury trial could embolden potential plaintiffs in other cases to come forward. "It's similar to what happened with tobacco," Professor Sebok said. "The very fact that they were able to see the corporate files raises the threat value, so the next time around there would be greater willingness to settle at some price."

While companies aggressively fight both the lawsuits and the statute on which they are based, many have also endorsed documents like the State Department's Voluntary Principles on Human Rights and Security. It outlines ways to ensure security for corporate operations and to prevent abuse — to add human rights clauses to contracts with security firms, for example.

Some have also begun to work with organizations outside government. Executives at the Royal Dutch/Shell Group are working with members of Human Rights Watch, based in New York, to improve the human rights situation in Nigeria, where the company has been accused of assisting in abuses against members of a local opposition group. And Unocal has met with representatives of Amnesty International and recently allowed observers from the Collaborative for Development Action, an independent consulting group based in Boston, to visit the Myanmar pipeline and study its impact on the local people.

"It's a very cynical strategy," said Arvind Ganesan, director of the business and human rights program at Human Rights Watch, "because you end up with companies' trying to do the right thing, but also trying to ensure that there's no consequences for doing the wrong thing."