WASHINGTON – For anyone who doubts that oral arguments matter in the U.S. Supreme Court, consider Justice Samuel Alito Jr.’s question last term in a case about corporate liability for human rights violations under the 1789 Alien Tort Statute.

Right out of the gate, Alito asked the lawyer advocating such liability: “The first sentence in your brief in the statement of the case is really striking: ‘This case was filed in 2002 by 12 Nigerian plaintiffs who alleged that Respondents aided and abetted the human rights violations committed against them by the Abacha dictatorship in Nigeria between 1992 and 1995.’ What business does a case like that have in the courts of the United States?”

“I think at that moment it became clear this was not a question about corporate liability,” recalled former Acting Solicitor General Neal Katyal of Hogan Lovells, adding that Alito is “the most penetrating questioner on the Court today.”

A divided panel of the U.S. Court of Appeals for the Second Circuit had held in Kiobel v. Royal Dutch Shell, 621 F. 3d 111 that there was no international rule of corporate liability for human rights violations. However, less than a week after hearing arguments in the case, the Supreme Court ordered reargument on a new issue directly related to Alito’s question: whether the 223-year-old law applies to conduct committed overseas—a question of extraterritoriality. The Kiobel reargument will be the first case heard in the new term beginning today.

The Alien Tort Statute, or ATS, is a provision in the 1789 Judiciary Act that gives federal courts jurisdiction over “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 extraterritoriality question is one that the nation’s business community, in particular, would love to see answered in the negative. To that end, 16 amicus briefs supporting Royal Dutch Petroleum have been filed, for example, by BP, Chevron, Coca-Cola, KBR, Occidental Petroleum, and the U.S. Chamber of Commerce. And they have turned to such heavyweight Supreme Court advocates as Katyal, Paul Clement of Bancroft, Jonathan Hacker of O’Melveny & Myers, and Seth Waxman of Wilmer Cutler Pickering Hale and Dorr, to make their case.

“These suits are brought because of the interim effect of labeling a company an international law violator which opens the door to settlement the longer the suit is pending,” said Andrew Pincus of Mayer Brown, who filed an amicus brief supporting Royal Dutch Petroleum on the original issue. “It’s often part of a larger PR campaign to get a company to change its behavior in the way that advocates want to happen.”

There are huge litigation costs for these companies, he added, and, at the end of the day, “Can U.S. courts litigate these cases? Are we going to send teams of people to foreign countries?”

Katyal, representing the Chamber, argues that the answer to the new question is governed by the justices’ 2010 decision in Morrison v. National Australia Bank, 130 S. Ct. 538, which held that unless a statute clearly indicates that it is to be applied extraterritorially, it does not. “Because the ATS provides no clear indication of extraterritorial application, that ends the inquiry,” he contends. “The ATS therefore does not apply to causes of action arising within the sovereign territory of other nations, regardless of whether the alleged tortfeasor is a citizen of, or has connections to, the United States.”

Stakes ‘Could Not Be Higher’

An array of human rights, civil rights and environmental organizations, international law scholars and victims of human rights violations disagree in 30 amicus briefs supporting Esther Kiobel.

“The stakes for international human rights litigation could not be higher,” said international law scholar William Dodge of the University of California Hastings College of Law.

“So long as the underlying cause of action in an ATS case rests on specific, universal, and obligatory norms of international law, nothing in international law prohibits the exercise of remedial jurisdiction in so-called ‘extraterritorial’ or foreign-cubed cases; indeed this Court has cited with apparent approval a line of cases that took precisely that approach,” writes Ralph Steinhardt of George Washington University Law School, citing Sosa v. Alvarez-Machain, 542 U.S. 692 (2004).

Steinhardt and others supporting the Kiobel plaintiffs argue that these cases are still subject to review for personal jurisdiction, forum non conveniens, comity and other limitations that may apply to any transnational case.

The United States, which supported corporate liability in the first Kiobel round, takes something of a middle road on the extraterritoriality question, and, notably, its brief is not signed by the Department of State. The government urges the court not to adopt a categorical rule barring the extraterritorial application of the ATS, but, it adds, there is no ATS cause of action in the circumstances of the Kiobel plaintiffs.

The historical context of the ATS does not support recognizing a private right of action challenging the acts of a foreign sovereign in its own territory, according to the government.

“Yet here, although petitioners’ suit is against private corporations alleged to have aided and abetted human rights abuses by the Government of Nigeria, adjudication of the suit would necessarily entail a determination about whether the Nigerian Government or its agents have transgressed limits imposed by international law,” writes the solicitor general. “Imposition of such liability would result from decisions of the Judiciary, which lacks the expertise of the political Branches to weigh the relevant considerations, and the jurisdiction of the courts would be invoked by private plaintiffs without ‘the check imposed by prosecutorial discretion,’ that the Executive can exercise in the criminal context.”

There are a variety of approaches that the court could take to resolve the issue, said Katyal, adding, “It seems to me, one way or another, it’s going to be a very tough one for the plaintiffs to win.”

Facing off in the new arguments once again will be Paul Hoffman of Schonbrun DeSinome Seplow Harris Hoffman & Harrison in Venice, Calif., for Esther Kiobel and the other plaintiffs, and for Royal Dutch Petroleum, Kathleen Sullivan of New York’s Quinn Emanuel Urquhart & Sullivan.