US Supreme Court Considers Corporate Liability Under Alien Tort Statute For Extraterritorial Human Rights Claims

Introduction

On February 28, 2012, the United States Supreme Court heard oral argument in an important case interpreting the Alien Tort Statute (ATS), Kiobel v. Royal Dutch Petroleum Co.1 At issue in this case is whether corporations can be held liable under the ATS, which permits aliens to file lawsuits in US federal courts for violations of customary international law. The Second Circuit Court of Appeals held below that corporate liability does not exist under the ATS because, under US Supreme Court jurisprudence, corporate liability is not a "specific, universal, and obligatory" norm of international law.2 Since then, the Seventh Circuit, Ninth Circuit, and DC Circuit have each issued decisions finding that corporations are proper defendants under the ATS.3

The Supreme Court's resolution of this circuit split is significant for multinational companies, which have been named as defendants in more than 180 ATS cases. More than 35 amicus curiae briefs were filed with the Court in Kiobel by corporations, governments, academics, trade associations, and human rights advocates. Amici did not confine their arguments to the issues decided by the Second Circuit. They also addressed whether US courts may properly exercise extraterritorial jurisdiction in ATS cases lacking a factual nexus to the United States, whether aiding and abetting liability exists under the ATS, and other issues. At oral argument, Justice Kennedy, often considered the "swing" vote on the Court, immediately expressed concern with the extraterritorial application of the ATS. In fact, several Justices focused their questioning during oral argument on extraterritoriality, and the Court has since instructed the parties to submit an additional round of briefing on this issue later this spring.

Background on the ATS

The ATS was enacted by the First Congress in 1789. It permits foreign plaintiffs to file civil tort actions in US federal courts for violations of the "law of nations or a treaty of the United States."4 The ATS was rarely used to bring human rights-related claims before 1980, when Paraguayan citizens successfully used the statute to bring a claim in New York against a Paraguayan police official for torture and murder committed in Paraguay.5 Since then, plaintiffs have increasingly used the ATS as a vehicle for asserting claims against foreign officials and multinational companies for alleged human rights violations, with cases producing damage awards in some instances exceeding $100 million.6

The Supreme Court had previously interpreted the ATS in Sosa v. Alvarez-Machain, where it limited ATS claims to a narrow set of violations of international law norms that are "specific, universal, and obligatory."7 Sosa instructed the lower courts to recognize new federal common law causes of action under the ATS only for violations of international law norms that are accepted universally and "defined with a specificity" that is comparable to the offenses the ATS was designed to redress at the time it was enacted, specifically piracy, violations of safe passage, and assaults on ambassadors.8 In addition, Sosa instructed courts to consider the "practical consequences" of allowing the cause of action to be litigated in federal court.9

In a footnote, the Court in Sosa raised but did not specifically address the issue of corporate liability. It stated that "[a] related consideration is whether international law extends the scope of liability for a violation of a given norm to the perpetrator being sued, if the defendant is a private actor such as a corporation or individual."10 Kiobel marks the first time the issue of corporate liability under the ATS is squarely before the Court.

Overview of Arguments in Kiobel

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