Ninth Circuit Rules On Corporate Liability For International Human Rights Violations

On Tuesday, October 25, a divided en banc US Court of Appeals for the Ninth Circuit waded into the muddy waters surrounding the question of whether corporations can be sued in US courts for violations of international human rights norms under the Alien Tort Statute ("ATS"), and muddied them further. In Sarei v. Rio Tinto, No. 02-56256 (9th Cir. October 25, 2011), the court, by a 7 to 3 vote, held that corporations can be held liable under the ATS for certain international law violations, and revived a long-running lawsuit against the UK-based mining multinational for genocide and war crimes, while affirming the dismissal of claims against the company for crimes against humanity and racial discrimination. The court addressed multiple issues regarding the interpretation and application of the ATS, and issued seven concurring and dissenting opinions.

The Ninth Circuit's decision came the week after the US Supreme Court agreed to decide whether corporations can be held liable under the ATS when it agreed to hear Kiobel v. Royal Dutch Petroleum, 621 F.3d 111 (2d Cir. 2010), as we reported here. In deciding Kiobel, the Supreme Court will likely resolve the split between the Second Circuit, which held in Kiobel that corporations cannot be held liable under the ATS, and the Seventh, Eleventh, DC and now Ninth Circuits, which have all held that corporations can be held liable under the ATS.

Until the Ninth Circuit's decision on Tuesday, it appeared that the Supreme Court's answer to the question of whether corporations can be held liable under the ATS would depend on how it answered the underlying question of whether the scope of liability for violations of international law is determined by international law itself or by federal common law. In holding that corporations could not be held liable under the ATS, the Second Circuit looked to international law to define the scope of liability. The Seventh, Eleventh and DC Circuits, by contrast, looked to the federal common law in reaching their conclusion that corporations may be held liable.

The Ninth Circuit has now complicated the issue by agreeing with the Second Circuit that international law determines the scope of liability under the ATS, but disagreeing with the Second Circuit about what international law provides. In contrast to the Second Circuit's decision in Kiobel, the Ninth Circuit's Sarei decision concludes that international law does recognize corporate liability, at least with respect to...