The United States is an attractive forum for plaintiffs to
challenge the actions of foreign states, due to U.S. courts'
liberal discovery rules, higher damage awards, availability of
class actions, and the absence of "loser pay" rules. But
foreign states are generally entitled to immunity from such civil
suits under the Foreign Sovereign Immunities Act
("FSIA").
As a result, plaintiffs often seek to circumvent FSIA immunity
through three different strategies. First, plaintiffs sue private
corporations that are not covered by the FSIA, claiming that the
corporations were complicit in the foreign state's alleged
wrongdoing. Second, plaintiffs sue the foreign states directly, but
try to fit the action into one of the FSIA's exceptions to
immunity, principally the exceptions for commercial activity,
torts, or takings. Third, plaintiffs sue the foreign officials who
allegedly committed or ordered the sovereign acts in question, who
do not enjoy FSIA immunity.
This Commentary analyzes the U.S. Supreme Court's
April 17, 2013 decision in Kiobel v. Royal Dutch Petroleum
Co.1 and other recent developments related to these
circumvention strategies, and discusses how corporations, foreign
states, and foreign officials can respond to such suits.
Suits Against Corporations
Plaintiffs seeking to circumvent FSIA immunity often sue private
corporations under the Alien Tort Statute ("ATS"), which
confers jurisdiction in U.S. courts over torts committed against
foreign citizens "in violation of the law of nations or a
treaty of the United States."
The Supreme Court recently revisited ATS jurisdiction in
Kiobel. In that case, plaintiffs alleged that the Nigerian
military committed various human rights abuses when it responded to
an uprising in the Ogoni region of the country. Rather than sue the
Nigerian government, plaintiffs instead sued Dutch and British oil
companies, claiming that they aided and abetted the Nigerian
military. In affirming the dismissal of the plaintiffs' claims,
the Supreme Court held that the ATS does not confer jurisdiction in
U.S. courts over claims "seeking relief for violations of the
law of nations occurring outside the United States."
Two issues remain unresolved under the Kiobel decision.
First, the Kiobel case had initially gone to the Supreme
Court on the question of whether corporate defendants may be sued
under the ATS. The Court in the end did not reach that issue, which
currently divides lower courts.
Second, in Kiobel the Court left open the possibility that
the ATS may provide jurisdiction over claims that "touch and
concern the territory of the United States ... with sufficient
force to displace the presumption against extraterritorial
application." And Justice Breyer, in an opinion concurring in
the judgment, suggested that the ATS provides jurisdiction when the
defendant is "an American national," or where "the
defendant's conduct substantially and adversely affects an
important American national interest." And certain human
rights violations would still be actionable in U.S. courts under
statutes, such as the Torture Victims Protection Act, which have
explicit grants of extraterritorial jurisdiction. Further
litigation can be expected on those contours of jurisdiction.
The Supreme Court had previously adopted a second limiting
principle with respect to the ATS, holding that the ATS confers
jurisdiction only over claims involving "a relatively modest
set" of "heinous actions" that violate
"specific, universal, and obligatory" norms of
international law.2 Consistent with this principle,
defendants will often be able to obtain dismissal of ATS claims by
arguing that the norm that the defendants allegedly violated is not
sufficiently specific, universal, and obligatory to be actionable
under the ATS. For example, in Best Medical Belgium, Inc. v.
Kingdom of Belgium,3 the plaintiffs claimed that a
Belgian court had acted with racially discriminatory animus when it
resolved bankruptcy proceedings against them. Jones Day argued, and
the district court agreed, that an isolated incident of racial
discrimination is not actionable under the ATS.
In addition to ATS claims, plaintiffs frequently assert claims
against corporations based on state law or foreign law, relying on
diversity or supplemental jurisdiction. Such claims will likely
become even more common now that the Kiobel decision
precludes similar claims under the ATS. For example in Bowoto
v. Chevron Corp., plaintiffs alleged that Chevron aided and
abetted Nigerian government security forces in committing certain
human rights abuses. In addition to claims under the ATS,
plaintiffs alleged assault, battery, negligence, and civil
conspiracy claims under California and Nigerian law, relying on
diversity and supplemental jurisdiction. After a five-week trial,
the jury returned a complete defense victory for Chevron, and the
Ninth Circuit affirmed the judgment.4
Even when a U.S. court does assert jurisdiction over
plaintiffs' claims (whether under the ATS or under diversity or
supplemental jurisdiction), defendants can raise a number of other
defenses:
Personal Jurisdiction. Because so-called
"specific" personal jurisdiction is typically unavailable
for claims arising from overseas conduct, plaintiffs have often
relied on "general" personal jurisdiction, which subjects
a corporation to suit on claims unrelated to the forum state when
it has sufficiently "continuous and systematic" contacts
with the state. The Supreme Court narrowed the scope of such
jurisdiction in its 2011 decision in Goodyear Dunlop Tires
Operations, S.A. v. Brown, which restricted general
jurisdiction over corporations to states in which their contacts
"are so 'continuous and systematic' as to render them
essentially at home in the forum State."5 Under
this standard, it should not be possible to assert general
jurisdiction over a non-U.S. corporation in a U.S. forum. Even as
to U.S. corporations, this standard may provide an effective weapon
against being subjected to suit in unfavorable jurisdictions.
The Court will likely expand on its Goodyear decision (and
possibly Kiobel as well) in DaimlerChrysler AG v.
Bauman, in which the Court granted certiorari on April 22,
2013.6 DaimlerChrysler, a German company, was sued for
alleged human rights violations by its Argentine subsidiary. The
jurisdictional basis for suing in the U.S. was that DaimlerChrysler
has another subsidiary that sells the company's autos in the
U.S. The Supreme Court took the case to address the question
whether a court may exercise general personal jurisdiction against
a foreign corporation for conduct occurring outside the U.S., based
solely on the fact that an indirect subsidiary of the corporation
does business in the forum state.
Political Question and Act of State Doctrines.
Lawsuits claiming that private corporations are complicit in
wrongdoing committed by a foreign state can be just as disruptive
of U.S. foreign relations as suits filed directly against the
foreign state, because U.S. courts still must sit in judgment of
the state's sovereign acts. As a result, defendants often may
seek dismissal under the political question doctrine or "act
of state" doctrine. For example in Corrie v.
Caterpillar, Palestinians who were allegedly injured when the
Israeli Defense Force used Caterpillar bulldozers to raze buildings
in the West Bank sued Caterpillar, claiming that the company had
aided and abetted Israeli human rights violations. The court
dismissed the suit under the political question doctrine,
concluding "[f]or this court to preclude sales of Caterpillar
products to Israel would be to make a foreign policy decision and
to impinge directly upon the prerogatives of the executive branch
of government." Alternatively, the court dismissed the suit
under the act of state doctrine because it would require the court
to "judg[e] the validity of a foreign sovereign's official
acts ... in a region where diplomacy is delicate and U.S. interests
are great."7
Derivative Sovereign Immunity. In some cases, a
corporate defendant may be entitled to derivative sovereign
immunity. For example, the Fourth Circuit in Butters v.
Vance held that a private contractor headquartered in Virginia
was entitled to such immunity when it followed the commands of a
foreign sovereign employer. As the court explained, "[a]ll
sovereigns need flexibility to hire private agents to aid them in
conducting their governmental functions.... To abrogate immunity
would discourage American companies from entering lawful agreements
with foreign governments and from respecting their wishes even as
to sovereign acts."8
Forum Non Conveniens. Under the common
law doctrine of forum non conveniens, a court may dismiss
a case if it determines that a forum in another country is a more
appropriate place to hear the case. Courts often grant such motions
when foreign plaintiffs file claims against foreign corporations,
given that trial of a foreign plaintiff's claims in the United
States is likely to be less convenient, and only "a complete
absence of due process in the alternative forum" will render
the alternative forum inadequate.9
Suits Against Foreign States
Plaintiffs also attempt to circumvent FSIA immunity by suing
foreign states directly for their sovereign acts but recasting the
action as a commercial dispute. Under the FSIA, certain lawsuits
that are "based upon a commercial activity" are not
entitled to FSIA immunity. The term "commercial activity"
is defined narrowly: a foreign state "engages in commercial
activity ... where it exercises only those powers that can
also be exercised by private citizens, as distinct from those
powers peculiar to sovereigns."10
Foreign states thus can often successfully argue that their conduct
was not commercial activity. For example, in Best Medical,
plaintiffs claimed that the Belgian government had failed to
deliver various investment subsidies and other incentives that it
had allegedly promised the plaintiffs. Jones Day argued, and the
court agreed, that promoting commerce and awarding government
subsidies "are not ... commercial activit[ies] available to
private parties." Because the FSIA's commercial activity
exception did not apply, the court dismissed plaintiffs' claims
for lack of subject matter jurisdiction.
Again, even when a plaintiff does successfully argue that an
exception to FSIA immunity applies, foreign states may also be able
to seek dismissal on grounds of act of state, political question,
or forum non conveniens, as discussed above.
Suits Against Foreign Officials
Another strategy plaintiffs frequently use to circumvent FSIA
immunity is to sue the foreign officials who allegedly committed or
ordered the act in question, rather than the foreign state. Prior
to the Supreme Court's decision in Samantar v.
Yousuf,11 this strategy was generally unsuccessful
because most courts held that foreign officials were entitled to
FSIA immunity. But in Samantar, the Court concluded that
the FSIA does not govern foreign officials' entitlement to
immunity.
Foreign officials are, however, still entitled to common law
sovereign immunity. In particular, a foreign official is entitled
to sovereign immunity with respect to acts performed in his
official capacity if the effect of exercising jurisdiction would be
to enforce a rule of law against the state. An individual acts in
his official capacity when he acts within the scope of his official
duties. And a suit enforces "a rule of law against the
state" when the lawsuit would require the court to sit in
judgment of the propriety of the state's sovereign acts.
Therefore, consistent with these principles, a foreign official is
entitled to broad protection from liability in U.S. courts for
actions taken on behalf of a foreign sovereign.
Even if a foreign official is not entitled to common law sovereign
immunity, he may still be able to assert one or more other
defenses. Because plaintiffs cannot sue foreign officials under the
FSIA, they typically must proceed under the ATS, which as discussed
above has a limited scope of jurisdiction. And foreign officials
may also assert the act of state and political question doctrines,
as well as forum non conveniens, discussed above. For
example in Best Medical, Jones Day successfully argued
that the act of state doctrine barred claims against three officers
of a Belgian court. As the Court explained, "[t]he act of
state doctrine limits the power of the United States courts to
examine and impugn the acts of another sovereign.... As a result,
United States courts cannot entertain a suit arising from acts
taken by a state official on behalf of that state." Finally,
foreign officials may seek dismissal for lack of personal
jurisdiction.
Footnotes
1. Kiobel v. Royal Dutch Petroleum Co., No. 10-1491, 2013 WL 1628935 (U.S. Apr. 17, 2013). Jones Day filed an amicus brief in support of the respondents in the case, on behalf of a group of professors of international law and federal jurisdiction.
2. Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) (internal quotation marks omitted).
3. Best Medical Belgium, Inc. v. Kingdom of Belgium, 2012 WL 6651976 (E.D. Va. Dec. 20, 2012). Jones Day represented the defendants in this case and successfully obtained dismissal of all claims against them.
4. Bowoto v. Chevron Corp., 621 F.3d 1116 (9th Cir. 2010). Jones Day successfully defended Chevron in this case.
5. Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011). Jones Day represented Goodyear before the Supreme Court and successfully obtained reversal of the lower court's judgment.
6. DaimlerChrysler AG v. Bauman, No. 11-965 (Apr. 22, 2013).
7. Corrie v. Caterpillar, Inc., 403 F. Supp. 2d 1019 (W.D. Wash. 2005), aff'd, 503 F.3d 974 (9th Cir. 2007).
8. Butters v. Vance Int'l, Inc., 225 F.3d 462 (4th Cir. 2000).
9. Tang v. Synutra Int'l, Inc., 2010 WL 1375373 (D. Md. Mar. 29, 2010), aff'd, 656 F.3d 242 (4th Cir 2011).
10. Saudi Arabia v. Nelson, 507 U.S. 349, 360 (1993) (emphasis added).
11. Samantar v. Yousuf, 130 S. Ct. 2278 (2010). Jones Day represented the defendant in this case before the Supreme Court.
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