Photographer: Andrew Harrer/Bloomberg

The federal Alien Tort Statute (ATS) originally was drafted to provide a forum for resolution of torts that violated the “law of nations,” as a safeguard against foreign nations holding the United States liable for harm to foreign citizens. Following the Nuremberg trials, the statute took on a second life beyond its original purpose, and in 2004, in Sosa v. Alvarez-Machain, 542 US 692 (2004), the Supreme Court recognized, in limited circumstances, common law claims for violations of the current law of nations. Now the Supreme Court, in Jesner v. Arab Bank, PLC, held on April 24 that the Alien Tort Statute, 28 U.S.C. 1350, does not apply to foreign corporations. In so doing, it resolved the open question in Kiobel v. Royal Dutch Petroleum, 569 U.S. 108 (2013), which was decided on the ground that all the acts complained of occurred outside the United States. A split in the circuits developed over whether the ATS applied to foreign corporations, and Jesner has now resolved that by affirming the Second Circuit’s view that it does not. Justice Kennedy wrote for the majority, though there was not unanimity of all portions of his opinion.

Essentially, the case involved multiple suits by multiple plaintiffs, some in the U.S., who sought to hold liable a Jordanian bank for helping finance terrorist acts; the connection to the U.S. was the transfer of funds through the clearing house interbank payment system. The language of the ATS, itself part of the Judiciary Act of 1789, states that “[t]he 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.”

Part I of the majority vote was a recitation of basic principles and precedent. The operative part of the opinion in Part II-B-1, constituting the majority, noted the court’s reluctance to extend the language of the ATS and its interpretive precedent to exercise caution in considering the use of “judicial authority to mandate a rule that imposes liability upon artificial entities like corporations.” Creation of such a private right of action implicated separation-of-powers concerns that would require Congressional action. In Part II-C, the majority noted the tenuous nature of the U.S. contacts with the terrorist acts abroad, and its reluctance to involve the court in actions that could have foreign policy consequences. The majority therefore held “that foreign corporations may not be defendants in suits brought under the ATS.” Essentially, it was a technical holding, based on the plain language of the ATS, set against a presumption against extension of extraterritorial reach. Unless and until Congress acts, the ATS has been held to not allow suits against foreign corporations, although individual employees may still be defendants.

The dissent, written by Justice Sotomayor, took issue with the conclusion and analytical approach, and argued that no foreign policy concerns should preclude the court from exercising common law discretion to extend the ATS’s application to corporations for “conscience-shocking behavior.” The dissent also addressed the plurality aspects of the opinion.

The majority aspects of the decision, as well as the various pluralities and the dissent, render a stark contrast in their views of the elasticity of the current wording of the statute. Congress has not hesitated to act in this area; the Torture Victim Protection Act of 1991 allows suits against foreign individuals engaged in torture or extra-judicial killing. Corporate social responsibility is moving in various contexts from soft law to hard law, notably in the reporting provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and in California’s Transparency in Supply Chain Acts. The Commission of the European Union defines corporate social responsibility as “the responsibility of enterprises for their impact on society.” The United Nations Guiding Principles on Business and Human Rights further recognize the importance of private sector companies in addressing human rights.

There was a recognition at the founding of the United States that the United States courts should provide a place for remedying violations of the law of nations. To allow the corporate form to provide a shield swims against the current. Private actors have their place. The Supreme Court has declined to move beyond the plain language of the ATS and essentially invited Congress to act. We join in that invitation.