Corporate alien tort was always a foundling doctrine. It came into the world as the presumed child of the 2nd U.S. Circuit Court of Appeals’ decision in Kadic v. Karadzic in 1995, but its birth was never confirmed by a definitive appellate review. Now, in Kiobel v. Royal Dutch Shell, the 2nd Circuit has declared the doctrine dead. The human rights lawyers who had adopted it are in a state of mourning.

Conceived in the 18th century largely as a means to protect diplomats abroad, the Alien Tort Statute (ATS) was reinvented in 1980 by the 2nd Circuit in Filartiga v. Pena-Irala as a vehicle to sue sovereign officials who had committed gross human rights abuse. Fifteen years later, the 2nd Circuit found the Bosnian Serb general Radovan Karadzic to be a legitimate target, even though Bosnian Serbia wasn’t a state. Creative plaintiffs lawyers soon concluded that alien tort also applies to non-state actors like corporations that violated the law of nations.

More than 150 alien tort cases have been launched against companies, according to the count of Steptoe & Johnson‘s Jonathan Drimmer, who has assembled the most exhaustive list we’ve seen. We count at least 14 live cases, plus another seven with alien tort claims dismissed pending other proceedings. The mining and energy industries were especially vulnerable.  But the companies that were likely to face trial included International Business Machines Corp., Ford Motor Co., General Motors Co. and Daimler AG for their historical roles in propping up the South African apartheid regime. These parties must feel a mix of relief that a threat of liability is likely to lift and resentment at having spent millions fending off a phantom doctrine.

The corporate defendants who settled are probably not happy either. With Drimmer’s help, we count at least 17 settlements flowing from alien tort suits. These include three large Holocaust agreements ($5.25 billion from German state and industry, $1.25 billion from Swiss banks and $210 million from Austrian state and industry); a reported $30 million from Unocal for Burmese pipeline allegations; a reported $20 million from U.S. clothing retailers for Saipan sweatshop allegations; and $15.5 million in Wiwa, which (like Kiobel) arose out of Shell’s activity in the Niger delta. This is not to mention an $80 million default judgment against Curacao Drydock Co., in the only business ATS case to be litigated to a successful conclusion at trial.

Corporate alien tort liability always eluded rigorous appellate review. The Kiobel concurrence lists 10 district or appeals court rulings that simply assumed its existence, and seven that accepted the theory expressly, including two in the 11th U.S. Circuit Court of Appeals, albeit in passing.

As fate would have it, the one ATS case ever taken by the Supreme Court, 2004′s Sosa v. Alvarez-Machain, dealt with an individual alien tort, and an idiosyncratic one at that. Sosa rejected arguments that would have killed all forms of ATS litigation. At the same time, its footnotes raised any number of threats to the corporate alien tort. One footnote openly questioned the apartheid claim. But the cat-like apartheid claim escaped U.S. Supreme Court review, for the unique reason that four justices held conflicting investments.

Kiobel turned on a different Sosa footnote entirely, which directed lower courts to consider “whether international law extends the scope of liability” to a corporation.

The 2nd Circuit reached this consideration in three complex and fractured steps, starting with its rulings in Khulumani v. Barclay National Bank Ltd. (October 2007) and Presbyterian Church of Sudan v. Talisman Energy (October 2009). To simplify, the appellate court ruled in Khulumani that liability for aiding and abetting violations of customary international law exists under the ATS, but left ambiguity as to where judges should look to define its content. Talisman established that, in filling the gaps of the ATS, judges should look to international rather than domestic law as their source.

Since then, Marc Gottridge of Hogan Lovells, who represents Talisman, has been arguing to anyone who would listen that the Talisman ruling throws into question the very existence of alien tort liability for corporations. When he called us last year to make this point after the Talisman opinion, we smiled politely and quickly steered the conversation elsewhere, because as everyone knew, 15 years of case law were built on the opposite premise. Evidently, 2nd Circuit Judge Jose Cabranes had a more open mind.

In Kiobel, which was heard by the same panel as Talisman on the same day in January 2009, Cabranes ruled that corporate liability does not exist under the ATS, because it does not exist under customary international law (which Talisman held should be the source of such rules).

It’s undisputed that no court has ever held a corporation liable under international law. Judge Pierre Leval, who passionately dissented from Cabranes’ reasoning, argues that international law is inconclusive on the existence of civil corporate liability, because no international court was ever in a position to consider it and criminal corporate liability is inherently problematic for distinct reasons.

The Supreme Court had the opportunity to bring rapid clarity to the field (and perhaps put the corporate alien tort out of its misery) by agreeing to hear Talisman. But on Monday of last week, the Court denied Talisman Energy’s conditional cross-petition on the issue of corporate liability.

That leaves an en banc 2nd Circuit appeal in Kiobel as the next step. Kiobel plaintiffs lawyer Paul Hoffman of Schonbrun DeSimone Seplow Harris Hoffman & Harrison told me that the 2nd Circuit panel lacked jurisdiction on corporate liability, because that issue was never raised in Kiobel (as it was in Talisman and Khulumani). Cabranes shrewdly tried to appeal-proof his opinion by couching it as a ruling on subject matter jurisdiction, which is always in play. But Hoffman would argue that this classification is untenable.

On the merits, Hoffman said he would argue that, because customary international law is inconclusive on corporate liability, courts should look to general principles of law. And civil corporate liability exists in nearly all domestic legal systems. He will also direct the court to a brief filed by legal historians in Khulumani, concluding that the ATS drafters would have assumed the existence of corporate liability based on the law of the time.

Reports of the corporate alien tort’s death have often been exaggerated. But at this point in time, it is verifiably dead in the circuit that summoned the alien tort to life 30 years ago. Plaintiffs lawyers will try strenuously to revive it in the 2nd Circuit en banc, and if needed in the Supreme Court. If they fail, then corporate liability for human rights offenses must and should take new legal forms. But that is an essay for another day.

This article first appeared on The Am Law Litigation Daily blog on