United States: Supreme Court Rejects Alien Tort Claims Premised On Overseas Conduct

Last Updated: April 24 2013
Article by Brittany Prelogar, Lucinda Low and Pieter H.F. Bekker

In Kiobel v. Royal Dutch Petroleum Co., the US Supreme Court significantly limited the viability of Alien Tort Statute (ATS) claims for human rights violations occurring on non-US soil.1 The Nigerian petitioners had filed ATS claims against Dutch and UK entities that operated in Nigeria through a jointly-owned local subsidiary for aiding and abetting human rights abuses by the Nigerian government. A five-Justice majority held that a presumption against extraterritorial application of statutes barred petitioners' claims in this case, where "all the relevant conduct took place outside the United States."2 The Court left open the possibility that ATS claims based on overseas conduct may "touch and concern the United States...with sufficient force" to overcome the presumption against extraterritoriality, but cautioned that "mere corporate presence" in the United States would not suffice.3 Notably, while the Court originally granted certiorari to consider the availability of corporate ATS liability, the Court did not rule on this issue.

ATS Background

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 in Filartiga v. Pena-Irala 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, multinational companies, and other defendants 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 Because the cause of action alleged in Sosa did not meet this standard, the claim was dismissed with no ruling as to whether the extraterritorial nature of the conduct at issue would have been a further bar to the claim. However, the Sosa court appeared to cite approvingly the Second Circuit's decision in Filartiga, which also involved conduct occurring within the territory of a foreign sovereign.9 In a footnote, the Court in Sosa raised but did not specifically address the issue of corporate liability,10 which was squarely before the Court for the first time in Kiobel.

Kiobel Procedural History

Kiobel was filed in 2002 in the US District Court for the Southern District of New York by Nigerian citizens from the Ogoni region of Nigeria against Dutch and British holding companies that were operating in the region through their Nigerian subsidiary.11 The petitioners alleged that the respondents aided and abetted human rights abuses committed by the Nigerian government, including torture, crimes against humanity, and arbitrary arrest and detention. The District Court granted in part and denied in part the respondents' motion to dismiss the petitioners' claims, and certified an order on its own initiative for interlocutory appeal to the Second Circuit.12

A divided Second Circuit issued its opinion on September 17, 2010. The Second Circuit panel did not decide the issues certified by the District Court but rather held as an issue of subject matter jurisdiction that no corporate liability exists under the ATS.13 After the Second Circuit's decision in Kiobel, the Seventh Circuit, Ninth Circuit, and DC Circuit each issued decisions in separate ATS cases finding that corporations were proper defendants under the ATS.14

On October 17, 2011, the Supreme Court granted certiorari to consider the issue of corporate liability.15 Following oral argument, the Court directed the parties to submit supplemental briefs on the question of "[w]hether and under what circumstances the [ATS] allows courts to recognize a cause of action for violations of the law of nations occurring within the territory of a sovereign other than the United States."16

Kiobel Holds No ATS Cause of Action Exists Where All Relevant Conduct Takes Place Outside the United States

Writing for the majority, Chief Justice Roberts was joined by Justices Scalia, Thomas, Alito, and Kennedy in holding that the presumption against extraterritorial application of US statutes set forth in Morrison v. Australia National Bank Ltd17operated to bar petitioners' claims in Kiobel. This canon of statutory interpretation provides that "[w]hen a statute gives no clear indication of an extraterritorial application, it has none."18 The Court expressed particular concern that ATS claims involving conduct within the territory of a foreign sovereign raised sensitive foreign policy concerns in which the judiciary should not interfere absent clear Congressional intent.19

The Court determined that nothing in the text or history of the ATS rebutted application of the presumption against extraterritoriality in ATS cases. In particular, the Court found unpersuasive petitioners' argument that the statute's use of the word "tort" necessarily encompassed the transitory tort doctrine, recognized at the time of the statute's enactment, which permitted courts to hear actions for personal injuries arising abroad.20 Further, while Sosa had identified piracy as one of the original offenses the ATS was designed to redress, the Court reasoned that piracy occurs on the high seas, rather than in the territory of a foreign sovereign, and thus does not raise the same concern of foreign policy clashes.21 The Court also found inconclusive an Attorney General Opinion from 1795 relating to plunder in the British Colony of Sierra Leone, which petitioners cited as evidence the ATS applied to violations of the law of nations that occurred on foreign territory.22 Finally, the Court reasoned that there was "no indication" the "ATS was passed to make the United States a uniquely hospitable forum for the enforcement of international norms."23

In its concluding paragraph, the Court held that, "[on] these facts," where "all the relevant conduct took place outside the United States," the presumption against extraterritoriality barred petitioners' claims.24 The Court recognized the possibility that claims could "touch and concern the territory of the United States...with sufficient force" to "displace" the presumption, but admonished potential plaintiffs that "mere corporate presence" would not suffice.25 Justice Kennedy, the crucial swing vote for the majority, observed in a concurring opinion that the Court's opinion leaves unresolved "significant questions regarding the reach and interpretation" of the ATS.26 Justices Alito and Thomas acknowledged in a separate concurrence that the Court's "narrow approach" and "formulation obviously leave[] much unanswered," but argued that, for an ATS claim to be recognized, the domestic conduct would need to be sufficient to violate "an international law norm that satisfies Sosa's requirements of definiteness and acceptance among civilized nations."27

Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, concurred in the Court's judgment but disagreed with its reasoning. Their concurrence suggested the ATS should provide jurisdiction 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."28 In their view, an important national interest would include "preventing the United States from becoming a safe harbor...for a torturer or other common enemy of mankind."29 Nonetheless, the Justices concurred with the majority that the parties and conduct in Kiobel lacked "sufficient ties to the United States" for jurisdiction to lie.30

Implications of Kiobel

While Kiobel undoubtedly limits the availability of ATS claims premised on overseas conduct, the decision "leaves for another day the determination of just when the presumption against extraterritoriality might be 'overcome.'"31 In particular, multinational companies can expect plaintiffs to continue asserting ATS claims premised on at least some US-based conduct in connection with the underlying tort. Plaintiffs also may try their chances with ATS claims against corporate defendants that have a more substantial connection to the United States than "mere presence" through an investment office, securities exchange listing, or the like. The lower courts will be tasked with determining whether such claims "touch and concern" the United States with "sufficient force" to "displace" the presumption against extraterritoriality.32 Courts are likely to remain sensitive to the risk of foreign policy friction acknowledged by all of the Justices, and to continue applying "principles such as exhaustion, forum non conveniens...comity," and deference to the Executive Branch to limit many of such claims.33 Further, while Kiobel did not rule on the availability of aiding and abetting liability under the ATS, Justice Breyer's concurrence appears to suggest that ATS claims premised on indirect acts of "help[ing] others" to commit human rights abuses are less likely to be recognized.34 The decision also did not address whether corporations are proper defendants under the ATS, an issue on which the Courts of Appeals were split at the time the Court agreed to hear Kiobel.

Despite the significant limitations Kiobel imposes on ATS claims, the decision does not foreclose other avenues for human rights-related litigation that plaintiffs have pursued in recent years. In particular, plaintiffs can be expected to continue bringing common law tort claims in US state courts, which already are the most common form of human rights-related action; claims under securities and racketeering-related laws; and lawsuits in non-US courts.35 Nor does Kiobel limit the wide array of out-of-court tactics used by plaintiffs to severely tarnish a company's reputation and brand.36 As a result, multinational companies must remain vigilant in their efforts to root out human rights abuses throughout their operations.37

We will continue to keep you apprised of developments related to business and human rights.

Footnotes

1. Kiobel v. Royal Dutch Petroleum Co., 2013 U.S. LEXIS 3159 (2013).

2. Id. at *26.

3. Id.

4. 28 U.S.C. § 1350 (2006).

5. See Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980).

6. See Mehinovic v. Vuckovic, 198 F. Supp. 2d 1322 (N.D. Ga. 2002) ($140 million); Mushikiwabo v. Barayagwiza, 1996 U.S. Dist. LEXIS 4409 (S.D.N.Y. Apr. 8, 1996) ($103 million).

7. 542 U.S. 692, 732, 748 (2004) (quoting In re Estate of Marcos Human Rights Litigation, 25 F.3d 1467, 1475 (9th Cir. 1994)).

8. 542 U.S. at 725.

9. Id. at 724, 730.

10. Id. at 732 n. 20.

11. Kiobel v. Royal Dutch Petroleum Co., No. 1:02-cv-07618 (S.D.N.Y. filed Sep. 20, 2002). The UK and Dutch holding companies, Royal Dutch Petroleum Company and Shell Transport and Trading Company p.l.c, respectively, combined in 2005 to form Royal Dutch Shell plc. See http://www.shell.com/global/aboutshell/investor/shareholder-information/share-capital/share-capital-history.html. The Nigerian subsidiary, Shell Petroleum Development Company of Nigeria, Ltd., was dismissed from the case for lack of personal jurisdiction.

12. Kiobel v. Royal Dutch Petroleum Co., 456 F. Supp. 2d. 457 (S.D.N.Y. 2006).

13. Kiobel v. Royal Dutch Petroleum, 621 F.3d 111 (2d Cir. 2010), reh'g denied, 642 F.3d 268 (2d Cir. 2011), reh'g en banc denied, 642 F.3d 379 (2d Cir. 2011).

14. Flomo v. Firestone Natural Rubber Co., 643 F.3d 1013 (7th Cir. 2011); Sarei v. Rio Tinto, PLC, 2011 WL 5041927 (9th Cir. Oct. 25, 2011) (en banc); Doe v. Exxon Mobil Corp., 654 F.3d 11 (D.C. Cir. 2011).

15. Kiobel v. Royal Dutch Petroleum Co., 132 S. Ct. 472 (2011).

16. Kiobel v. Royal Dutch Petroleum Co.,2013 U.S. LEXIS 3159, at *8 (2013).

17. 130 S. Ct. 2869, 2878 (2010).

18. Id. at *10.

19. Id. at *11.

20. Id. at *16.

21. Id. at *19 -*21. Cf. id. at *34 (Breyer, J., concurring)(arguing that piracy takes place on a vessel that "falls within the jurisdiction of the nation whose flag it flies").

22. Id. at *21.

23. Id. at *23, *24.

24. Id. at *26.

25. Id.

26. Id. at *26 (Kennedy, J., concurring).

27. Id. at *29 (Alito, J., concurring).

28. Id. at *30, *31 (Breyer, J., concurring).

29. Id. at *31 (Breyer, J., concurring).

30. Id.

31. Id. at *37 (Breyer, J., concurring).

32. Id. at *26.

33. Id. at *40 (Breyer, J., concurring).

34. Id. at *51 (Breyer, J., concurring).

35. For example, on January 30, 2013, a court in The Netherlands, applying Nigerian law, ordered a Nigerian subsidiary of Royal Dutch Shell to compensate a Nigerian citizen, who had sued various Shell entities jointly with a Dutch non-governmental organization, for oil pollution damage caused by third-party sabotage in Nigeria, while dismissing all claims against the parent company. The amount of compensation is yet to be determined in that case. See Steptoe advisory, "Dutch Court Orders Shell Nigeria To Compensate Nigerians for Oil Pollution Damage Caused by Third-Person Sabotage in Nigeria," January 2013.

36. See Jonathan C. Drimmer & Sarah R. Lamoree, Think Globally, Sue Locally: Trends and Out-of-Court Tactics in Transnational Tort Actions, 29 BERKELEY J. INT'L L. 456 (2011).

37. See Jonathan C. Drimmer & Brittany C. Prelogar, Kiobel and the Guiding Principles on Business and Human Rights, ACC DOCKET, June 2012, at 69.

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Brittany Prelogar
Pieter H.F. Bekker
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