United States: What Might Liability Under The ATS Look Like Post-Kiobel?: The Example Of Private Contractors

Last Updated: June 24 2013
Article by Elizabeth Holland

Following the Supreme Court's decision in Kiobel v. Royal Dutch Petroleum a number of questions remain as to whether corporations may be held liable under the Alien Tort Statute ("ATS") for serious violations of human rights.  The U.S. Supreme Court, in a unanimous decision authored by Chief Justice Roberts, held that the presumption against extraterritorial application of federal statutes applies to the ATS, and there is nothing in the one-sentence statute passed in 1789 to rebut that presumption.

One industry for which a number of these unanswered questions may loom largest is private contracting. Two reports published just last month (one by the Congressional Research Services and another by the U.S. Government Accountability Office) remind us that private contractors, and particularly private security contractors, play a significant role in government operations. It may be helpful to understand what, if any, liability may still attach to private contractors under the ATS post-Kiobel by working through the following questions:

1.  Is the ATS dead?

To borrow from Mark Twain: reports of the death of the ATS may be greatly exaggerated. Though some commentators see the Kiobel decision as delivering a mortal blow to the ATS, it may be more accurate to describe the effect of Kiobel as significantly narrowing the scope of the ATS. In fact, in his one-paragraph concurrence Justice Kennedy states "[t]he opinion of the Court is careful to leave open a number of significant questions regarding the reach and interpretation of the Alien Tort Statute."  He goes on to state that there may be a number of cases in which "allegations of serious violations of international law principles . . .[in which] the proper implementation of the presumption against extraterritorial application may require some further elaboration and explanation."

The Court stated that for a claim to fall within the ATS it must "touch and concern the territory of the United States, [and] do so with sufficient force to displace the presumption against extraterritoriality." This is read to largely exclude from the scope of the ATS "foreign cubed" cases, or those cases in which a foreign plaintiff sues a foreign defendant for a wrong committed abroad. The decision is also read to preclude generally claims against foreign corporations for wrongs committed outside the United States. Thus, the practical effect of the narrowing of the ATS may be that U.S. private contractors become an attractive focus for plaintiffs.

2.  Do corporations have immunity under the ATS?

The Supreme Court did not answer directly the question of whether corporations may be held liable under the ATS. Though the question was briefed in anticipation of the first oral argument before the Supreme Court, the Justices did not address the issue directly in the Kiobel decision. A reasonable interpretation of the Justices' position, however, is that there is corporate liability under the ATS. Chief Justice Roberts seems to contemplate this: "Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices." Such a statement only makes sense if one allows for corporate liability (albeit under certain circumstances).  Thus, generally speaking, private contractors remain exposed to potential liability.

It is worth noting, however, that in the Second Circuit, there is no corporate liability under the ATS.  The ruling of the Second Circuit in its Kiobel decisionis still good law – though future cases may challenge this.

3.  Are U.S. corporations more at risk under the ATS?

They may be. Because the ATS was narrowed to essentially preclude "foreign cubed cases," and there are few realistic scenarios in which a claim against a foreign corporation would satisfy the "touch and concern" criteria articulated by the Court, U.S. corporations may become a focus of ATS plaintiffs. Under the framework established by the Court an ATS claim requires a foreign plaintiff (because U.S. citizens can't bring claims under the ATS) to articulate a violation of international law that is "specific, universal and obligatory," and that "touches and concerns the territory of the United States." Thus, U.S. companies who commit violations abroad may be liable if the plaintiff can tie the claim back to actions that "touch and concern the territory of the United States." In the case of private contractors it is possible to imagine a U.S. company being sued for a violation committed abroad where key decisions or directions were issued from company headquarters in the United States. Such actions could conceivable satisfy the "touch and concern" criteria.

4.  Can a corporation be liable under the ATS for aiding and abetting?

Under the scenario outlined above, the question arises whether a U.S. corporation could be held liable for aiding and abetting a violation that takes place abroad. The Kiobel decision did not address the question of aiding and abetting liability, but the Supreme Court recently granted certiorari in Rio Tinto v. Sarei and is expected to address that very issue.

Conclusion

Thus, though the U.S. Supreme Court significantly narrowed the scope of the ATS, a consequence of the narrowing may be a renewed focus on U.S. corporations for both their actions abroad and their actions at home. Liability for violations committed is not limited to the ATS, of course, and companies should remember that a private individual may still be held liable under the Torture Victim Protection Act, and a company may still be held liable under state law tort claims.

The question of potential defenses in the face of liability is an important one, particularly for U.S. contractors. A range of defenses have been advanced in cases involving contractors, including the political question doctrine, preemption under the Federal Tort Claims Act and the combatant activities exception to the Federal Tort Claims Act.

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