WASHINGTON – The U.S. Supreme Court yesterday sharply limited the reach of a federal law used to hold corporations and others accountable for human rights abuses committed abroad. But human rights lawyers predicted additional litigation over how much of the federal courthouse door was left ajar.
Writing for the court in Kiobel v. Royal Dutch Petroleum, 10-1491, Chief Justice John Roberts Jr. said the presumption against the extraterritorial application of federal laws applies to the 1789 Alien Tort Statute (ATS).
That presumption, a canon of statutory interpretation, says that when a law gives no clear indication that it applies to conduct outside of the United States, it does not apply.
The Alien Tort Statute, enacted by the First Congress, states that "the district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." The law has been a major tool in the past 30 years for bringing alleged human rights violators into the federal courts.
Roberts wrote that nothing in the text, history or purposes of the statute indicated that the law was passed "to make the United States a hospitable forum for the enforcement of international norms."
The immediate impact of the ruling is to shut down the Kiobel case in the federal courts. The case stemmed from a lawsuit filed in 2002 by 12 Nigerian nationals against three foreign oil companies. They alleged the oil companies enlisted the Nigerian military in a campaign of torture, executions and detentions to suppress opposition to the companies’ operations in the environmentally sensitive Ogoni region.
"On these facts, all the relevant conduct took place outside the United States," Roberts wrote. "And even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application."
Roberts added that corporations often are present in many countries, "and it would reach too far to say that mere corporate presence [in the United States] suffices."
Although all of the justices agreed that the Kiobel case could not proceed, the chief justice garnered only five votes for his reliance on the presumption against extraterritoriality. He was joined by Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas and Samuel Alito Jr.
Alito, joined by Thomas, wrote in a separate concurring opinion that he would use a broader standard to block cases under the presumption.
But Kennedy, also writing separately, said the court’s opinion was "careful to leave open a number of significant questions" about the reach and meaning of the Alien Tort Statute.
"Other cases may arise with allegations of serious violations on international law principles protecting persons, cases covered neither by the [Torture Victims Protection Act] nor by the reasoning and holding of today’s case; and in those disputes the proper implementation of the presumption against extraterritorial application may require some further elaboration and explanation," Kennedy wrote.
The remaining four justices took a different approach to determining whether cases could go forward under the Alien Tort Statute.
In an opinion concurring in the judgment, Justice Stephen Breyer wrote that he would find jurisdiction under the law where the alleged tort occurs on U.S. soil; the defendant is a U.S. national; or the defendant’s conduct substantially and adversely affects an important American national interest. The last factor, he said, includes "a distinct interest in preventing the United States from becoming a safe harbor (free of civil as well as criminal liability) for a torturer or other common enemy of mankind."
The court’s ruling was immediately hailed by the U.S. Chamber of Commerce, a number of whose members have been sued in recent years under the statute. The chamber supported Royal Dutch Petroleum in the case.
"The U.S. Supreme Court’s decision today ensures that trial lawyers cannot continue to use the American judicial system to expose global businesses to frivolous and costly lawsuits," Thomas Donohue, the chamber’s president and CEO, said in a statement. "Today’s decision helps to ensure that America will continue to be an attractive place to do business and removes barriers for companies looking to do business throughout the world."
Andrew Pincus of Mayer Brown, who filed an amicus for The Clearinghouse Association on behalf of Royal Dutch Petroleum, said, "By ruling that the U.S. law applies only to conduct within the United States, the Supreme Court has eliminated a source of considerable tension between the United States and many of its closest friends and allies, who resented our country’s assertion of world-wide jurisdiction over their citizens’ acts outside of the territory of the United States."
Although human rights lawyers and organizations expressed deep disappointment with the decision, a number of them said they believed some cases would be allowed to go forward under the Alien Tort Statute.
"It’s fairly clear from all of the opinions that the court is still uncertain about the extent to which the ATS allows claims that arise outside of the United States for human rights violations," said the Nigerians’ high court counsel, Paul Hoffman of Schonbrun DeSimone Seplow Harris Hoffman & Harrison in Venice, Calif. "Significantly, Justice Kennedy is the fifth vote and he is more explicit that this is a narrow holding and there may be other cases that arise not covered by the [Torture Victims Protection Act] nor by the holding in this case."
Hoffman added, "I think there will be briefings in cases pending around the country, both involving corporations and individuals, to flesh out the meaning of the majority opinion and whether a case ‘touches and concerns’ the United States in such a way that the presumption against extraterritoriality does not apply."
Marco Simons, legal director of EarthRights International, said the decision in some ways privileges the rights of multinational corporations over the rights of U.S. corporations.
"The court has essentially said while U.S. corporations may be sued in the United States for international human rights abuses, foreign corporations who have the privilege of doing business in the United States don’t need to worry about getting sued here simply as a consequence of doing business in the United States," Simons said. "This is bad policy being written by the Supreme Court."
"There is a pretty strong ray of hope that U.S. courts in the right circumstances will still be able to hear the right kinds of cases, but that is for additional litigation in the future," said Ralph Steinhardt of George Washington University Law School, counsel to an amicus group of international law scholars who supported the Nigerian nationals.
The underlying facts of Kiobel involve the Movement for the Survival of the Ogoni People, which in the 1990s was comprised of a group of activists advocating for environmental and social justice surrounding oil exploration by Royal Dutch Shell and its subsidiaries in the Ogoni region of the Niger Delta.
Nine members of the movement, including Barinem Kiobel, were arrested, charged with specious crimes, tortured and hanged. Kiobel’s widow Esther and 11 other plaintiffs, all either victims of torture or relatives of victims residing in the United States, brought a class action suit in the Southern District of New York.
According to the plaintiffs, Royal Dutch Petroleum, parent company of Shell, was complicit with the brutal Nigerian dictatorship in "a widespread and systematic campaign of torture, extrajudicial executions, prolonged arbitrary detention, and indiscriminate killings constituting crimes against humanity to violently suppress this movement."
Second Circuit Ruling
The U.S. Supreme Court decision affirms a 2010 ruling by the U.S. Court of Appeals for the Second Circuit, albeit on different grounds.
The circuit had the case on an appeal from a ruling by Southern District Judge Kimba Wood (See Profile), who had dismissed several claims but had allowed others to remain, most significantly the claim of aiding and abetting crimes against humanity.
In 2010, a 2-1 majority of Judges Jose Cabranes (See Profile) and Dennis Jacobs (See Profile) rejected the theory that corporations can be held liable in the United States for violations of international law in foreign countries (NYLJ, Sept. 20, 2010).
Cabranes wrote that the statute, passed in 1789 to allow non-U.S. citizens redress from violations of the law of nations such as piracy, attacks on ambassadors and violations of the rights of safe passage, lay dormant until 1980, when the Second Circuit said that a U.S. court could entertain a foreign citizen’s suit claiming torture by an individual in a foreign country in Filartiga Pena-Irala, 630 F.2d 876.
Cabranes also traced the history of crimes against humanity back to the Nuremberg trials, where he said the guiding principle has been to focus "not on abstract entities" but on individual responsibility for people who commit war crimes, genocide and torture."
Customary international law, he said, "has steadfastly rejected the notion of corporate liability for international crimes, and no international tribunal has ever held a corporation liable for a violation of the law of nations."
Judge Pierre Leval (See Profile) penned a lengthy dissent, saying the majority opinion "deals a substantial blow to international law and its undertaking to protect fundamental human rights."
The issue of corporate liability under the ATS divided the entire Second Circuit as much as it divided the high court panel.
In 2011, the circuit voted five-to-five on whether to rehear Kiobel en banc, with six votes needed for a rehearing (NYLJ, Feb. 7, 2011).
The original panel also split along the same lines in denying a rehearing of their own, with Jacobs and Leval taking aim at one another.
Leval said that "most of Judge Jacobs’s grievances are against the exercise of Alien Tort Statute jurisdiction generally and against the burdens our legal system places on defendants generally and have no bearing on whether tort liability falls on corporations as well as individuals."
Leval said Jacobs "reveals an intense, multi-faceted policy agenda that underlies the majority’s undertaking to exempt corporations from the law of nations."
Jacobs shot back, "In short, this case has no great practical effect except for the considerable benefit of avoiding abuse of the courts to extort settlements. Judge Leval, passim, reads my words as giving moral absolution to moral monsters. For the record: even moral monsters are humans, and I would happily see them hanged."
@|Marcia Coyle, chief Washington correspondent for The National Law Journal, can be contacted at email@example.com. Mark Hamblett contributed to this report.