United States: The Final Breaths of the Alien Tort Statute

On April 17, 2013, the Supreme Court decided Kiobel v. Royal Dutch Petroleum.  For all intents and purposes, the decision eliminates use of the federal Alien Tort Statute ("ATS") as an employment law weapon to be used against multinational companies for employment practices overseas.

History of the Alien Tort Statute

The ATS (also known as the Alien Tort Claims Act) – a creature of the first United States Congress and passed in 1789 – is all of one sentence long.  It reads in full:  "The 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."

The ATS received little attention for over 180 years. Then, in 1980, a Paraguayan woman living in Washington, D.C. on a visitor's visa learned that a former official of the Paraguayan government (also a Paraguayan citizen), who had allegedly participated in the torture death of her 17-year-old brother, was living in Brooklyn, New York.  She sued the official under the ATS.  In Filartiga v. Pena- Irala,1 the Second Circuit Court of Appeals held that the ATS permits aliens to file tort claims against violators of what is variably known as "the law of nations," or "customary international law," including war crimes and crimes against humanity.

Over the past 25 years, a limited number of federal courts have permitted foreign victims to sue under the ATS for violations of international law, such as summary executions, genocide, war crimes, crimes against humanity, and cruel, inhuman, or degrading treatment.2

Some of those lawsuits were brought against U.S.-headquartered multinational corporations for their alleged involvement with improper and abusive labor practices in developing countries that were said to constitute human rights violations.

Historically, there has been a split among federal appellate courts as to whether ATS cases may be successfully prosecuted against private corporations.  In 2010, a federal district court and a federal appellate court held that corporate liability was unavailable under the ATS.  In one such case,3 a federal district court dismissed claims that a company was complicit in the forced labor and torture of Malian field workers located in the Ivory Coast, finding insufficient support under international law to hold corporate entities accountable under the ATCA. 

Similarly, in Kiobel v. Royal Dutch Petroleum4 – the case which ultimately wound its way to the U.S. Supreme Court – the Second Circuit Court of Appeals held that the ATS does not provide a basis for corporate liability for alleged violations of international law. 

In many cases, however, lower courts have recognized an "aiding and abetting" theory of corporate liability.  Under this theory, a corporation that assists or supports governments in conduct that violates human rights can be held liable in the United States.5 The aiding and abetting theory of corporate liability was one of the theories asserted by the plaintiffs in Kiobel.

Procedural History and Decision

Kiobel involved a group of Nigerian villagers who filed a federal court lawsuit in the Southern District of New York, claiming that several corporate entities aided and abetted the extrajudicial killing, rape and other human rights abuses committed by Nigerian military forces in connection with the corporations' oil exploration in Nigeria.  During the early 1990's, the villagers were attacked by the Nigerian military and police forces. 

The plaintiffs claimed that the corporate defendants aided and abetted the atrocities committed by providing the Nigerian military and police forces with food, transportation, and compensation.  They also alleged that the corporate defendants permitted the Nigerian forces to use defendants' property as a staging ground to attack the Nigerian villagers.  At the time the complaint was filed, the United States had granted political asylum to the villagers, all of whom were residing in the United States as legal residents. 

The case found its way to the Second Circuit Court of Appeals where, in October 2010, a divided court determined that international law does not support claims for corporate liability under the ATS.  The Kiobel majority held that international law (rather than domestic law) should determine whether the ATS should extend to corporations.  The majority concluded that international law does not warrant the extension of ATS liability to corporate actors.  In sum, the Second Circuit reasoned that customary international law has rejected the notion of corporate liability for international crimes, and no international tribunal has ever held a corporation liable for a violation of the laws of nations.

The villagers appealed to the United States Supreme Court, which agreed to hear the case.  Initially, the Court was asked to determine (1) whether the issue of corporate liability under the ATS is a merits or jurisdictional question; and (2) whether corporate liability can be assessed under the ATS.  Less than one week after oral argument, however, the Court issued an order requesting supplemental briefing on the additional issue of whether, and under what circumstances, the ATS can be used to address violations of the law of nations occurring outside the United States.6

The Opinion

On April 17, 2013, Chief Justice Roberts delivered the opinion of the Court, which unanimously upheld the Second Circuit's dismissal of the claims.  While the outcome was unanimous, the Court did not unanimously agree on the rationale.  The majority approach concluded that "the presumption against extraterritoriality applies to claims under the ATS, and that nothing in the statute rebuts that presumption." The Court addressed only the question of the extraterritorial application of the ATS, not the question of corporate liability.

The Court made it clear that it will not act as "the Supreme Court of the World."  The fear expressed in the opinion was that if the ATS applied extraterritorially without express permission from Congress, the Court would run the risk of adopting an interpretation of the law that carried "foreign policy consequences not clearly intended by the political branches."7 The Court stated that the ATS is a "strictly jurisdictional" statute and does not provide for an independent cause of action.  Rather, the ATS "allows federal courts to recognize certain causes of action based on sufficiently definite norms of international law."

The Court was not willing, however, to completely relinquish power over conduct occurring on foreign soil.  The opinion concludes:

"On these facts, all the relevant conduct took place outside the United States.  And even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application....  Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices.  If Congress were to determine otherwise, a statute more specific than the ATS would be required."  (internal citations omitted) (emphasis added)

The Court therefore suggested that with the right set of facts that "touch and concern the territory of the United States," the ATS may be the vehicle for aliens to prosecute conduct that occurred on foreign soil in U.S. courts.  Justices Alito and Thomas, writing separately in their concurrence, noted that this "formulation obviously leaves much unanswered."8  Although the majority rather dramatically narrowed the scope of the ATS, future courts will undoubtedly grapple with the extent to which plaintiffs might be able to assert a viable claim under the ATS. 

Breyer Concurrence

Justice Breyer, together with Justices Ginsburg, Sotomayor and Kagan, joined in the Court's conclusion to dismiss the Kiobel claims, but did not adopt the majority's reasoning.  The Breyer concurrence operates on the basis that the ATS "was enacted with 'foreign matters' in mind,"9 and that jurisdiction under the ATS is appropriate where "(1) the alleged tort occurs on American soil, (2) the defendant is an American national, or (3) the defendant's conduct substantially and adversely affects an important American national interest...."10 Justice Breyer referred to  previous ATS cases in which the alleged ATS violators were residing in the United States, and suggested that this could be one example where a "distinct" and "important" American interest might overcome the strong presumption against extraterritorial application.

Justice Breyer did not ignore the majority's concern that the extraterritorial application of the ATS would infringe on the sovereignty of other nations.  He simply did not put as much stock in this fear.  Justice Breyer highlighted in his concurrence the safeguards that are already available, such as exhaustion of remedies, forum non conveniens, and comity. 

The Implications

Kiobel establishes that in an unstable world, multinational enterprises may not be held responsible under the ATS in U.S. courts for foreign government or other third party atrocities that may occur overseas and over which they have no control.  Of course, notwithstanding this decision, multinational enterprises must remain concerned about overseas business practices.  Global companies cannot ignore allegedly unfair employment practices, regardless of where they occur, particularly in today's world of instantaneous communication.  The elimination of the ATS as a weapon against global enterprises does not diminish the importance of addressing legitimate complaints, regardless of where they originate.

It is also uncertain how the Court's strong reluctance against imposing domestic law extraterritorially will apply in other contexts.  For example, the Kiobel decision reinforces the Court's reluctance in an earlier decision11 to apply domestic law extraterritorially, which may lend further clarity to the possible extraterritorial application of Section 806 of the Sarbanes-Oxley Act of 2002.  

In addition, the Court's ruling could affect the viability of other claims brought under U.S. law that arise from overseas conduct.  For example, a recent trend has developed in which plaintiffs have sought to hold U.S.-based multinational enterprises liable for violations of local labor laws committed by their suppliers who disregard the companies' codes of conduct.  For example, the Ninth Circuit Court of Appeals has held12 that a U.S. company's good faith requirement, contained in its code of conduct, that foreign suppliers follow ethical labor standards did not allow a supplier's employees to sue the U.S. company when their employer failed to follow the standards.  It will be interesting to see what effect, if any, the Kiobel decision will have on this trend.

Footnotes

1 630 F.2d 876 (2d Cir. 1980).

2 See e.g. Flomo v. Firestone Natural Rubber Co., 643 F.3d 1013, 1017 (7th Cir. 2011); Romero v. Drummond Co., 552 F.3d 1303, 1315 (11th Cir. 2008); Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252 (11th Cir. 2009); Herero People's Reparations Corp. v. Deutsche Bank, A.G., 370 F.2d 1192 (D.C. Cir. 2004); Wiwa v. Royal Dutch Petroleum, 226 F.3d 88 (2d Cir. 2000); Sarei v. Rio Tinto, PLC, 550 F.3d 822 (9th Cir. 2008).

3< Doe v. Nestle, S.A.,  _______, 2010 U.S. Dist. LEXIS 98991 (C.D. Cal. Sept. 8, 2010).

4 Kiobel v. Royal Dutch Petroleum, 621 F.3d 111 (2d Cir. 2010).

5 See, e.g., Almog v. Arab Bank., 471 F. Supp. 2d 257 (E.D.N.Y. 2007).

6 The Kiobel case drew wide interest from a variety of domestic and international parties, attracting approximately 70 amicus briefs.  http://www.scotusblog.com/case-files/cases/kiobel-v-royal-dutch-petroleum/

7 EEOC v. Arabian American Oil Co., 499 U.S. 244, 248 (1991). 

8 Justices Alito and Thomas also reinforced the principles of Sosa v. Alvarez Machain, 542 U.S. 692 (2004), that any further ATS claim that theoretically falls within the confines of the majority's holding must nonetheless satisfy "Sosa's requirements of definiteness and acceptance among civilized nations."

9 Morrison v. National Australia Bank Ltd., 561 U.S. ___, ____ (2010) (slip op., at 5-6), 130 S. Ct. 2869, 2884 (2010). 

10 See Restatement (Third) of Foreign Relations Law § 402.

11 Morrison, 561 U.S. ____, 130 S. Ct. 2869 (2010).

12 Doe v. Wal-Mart Stores, Inc., 572 F.3d 677 (9th Cir. 2009).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Philip M. Berkowitz
Michael G. Congiu
John Kloosterman
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.