United States: The Supreme Court Considers Whether Companies Can Be On The Hook For Human Rights Violations Under The Alien Tort Statute

Last Monday, the U.S. Supreme Court agreed to address the question of whether companies can be liable in federal court for human rights violations under a 1789 law. Most appeals courts that have considered this question found that corporations can be liable for torts under the Alien Tort Statute. In Jesner et al. v. Arab Bank, PLC, the Supreme Court will review a ruling by the Second Circuit, the lone dissenting circuit.

Suing Entities that Finance Terrorism

The Jesner case concerns a Jordan-based bank accused of providing banking services to various terrorist groups through its New York branch. The plaintiffs—approximately 6,000 individuals affected by terrorist attacks in Israel and Palestine—claim that the bank "served as the 'paymaster' for Hamas and other terrorist organizations, helping them identify and pay the families of suicide bombers and other terrorists." In 2005, the U.S. Treasury Department and the Office of the Comptroller of the Currency concluded that the bank had failed in implementing money-laundering and terrorist-financing controls and fined the bank $24 million. The bank also lost at trial in a related case involving claims filed under the Anti-Terrorism Act by U.S. victims.

Now that certiorari has been granted, the parties will submit briefing over the next few months, likely completed near the beginning of the Supreme Court's next term (which starts in October). After briefing is complete, oral argument follows within a few weeks. The Court typically issues its decision within a few months of the oral argument.

The Supreme Court previously sidestepped the question of corporate liability in Kiobel v. Royal Dutch Petroleum Co. in 2013 and denied certiorari on the question in Nestlé U.S.A. v. Doe in 2016. Now that the Supreme Court is squarely addressing the question in Jesner, the case is widely expected to have far-reaching implications for U.S.-connected corporations who conduct business in high-risk jurisdictions abroad.

A Modern Take on a 228-Year-Old Statute

Passed by the first Congress in 1789, the Alien Tort Statute is a brief federal provision that simply states that district courts have jurisdiction over "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 Alien Tort Statute, part of the Judiciary Act of 1789, is a historical mystery. As Judge Henry Friendly of the Second Circuit has written, "no one seems to know whence it came." The Alien Tort Statute remained largely dormant between its passage and the latter half of the 20th century. The statute had only been employed 21 times between 1789 and 1980, with only two courts upholding jurisdiction.

The Alien Tort Statute found a new life in the Second Circuit's 1980 decision, Filártiga v. Peña-Irala, which held that an official's torture of an alien in detention violates international human rights norms such that the Alien Tort Statute confers jurisdiction. Following in the footsteps of Filártiga, courts have since recognized that the Alien Tort Statute provides a vehicle for them to adjudicate substantive rights that are universally accepted by international law. Since then, the Alien Tort Statute has been the basis for a wide range of lawsuits under the "law of nations." Typically, successful cases under the Alien Tort Statute involve war crimes, crimes against humanity, or other substantial violations of international norms.

The U.S. Supreme Court first analyzed the Alien Tort Statute in detail in 2004. Prior to Sosa v. Alvarez-Machain, some courts had interpreted the Alien Tort Statute to create a federal tort addressing violations of the law of nations. The Sosa Court rejected this, narrowing the scope of the Alien Tort Statute to confer jurisdiction only over actions under the law of nations that "rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to the features of [certain] 18th-century paradigms."

Who Is Subject to the Alien Tort Statute?

In the early period of its enforcement, the Alien Tort Statute was primarily asserted against former government officials, acting under color of authority, for human rights violations. This was expanded in another Second Circuit decision, Kadic v. Karadzic, which, in 1995, recognized that the Alien Tort Statute is not confined to state action that violates international norms (e.g., genocide and war crimes). Moreover, for violations that require official action (e.g., state-sanctioned torture), non-state actors can violate international law by acting in concert with state actors.

In the years since Kadic, courts have further expanded its reasoning to include non-natural persons, such as corporations, starting with Doe v. Unocal Corp, an influential Central District of California decision from 1997. With Kiobel and now Jesner, the Supreme Court faces a circuit split on this question, with several circuits finding that the Alien Tort Statute permits corporate liability and only one reaching the opposite conclusion. Ironically, it is the Second Circuit—the same circuit that initiated the line of modern Alien Tort Statute cases in Filártiga and expanded the statute beyond official state action in Kadic—that is alone in limiting the statute to individuals. As the Second Circuit wrote in its order under review in Jesner, "there is a growing consensus among [its] sister circuits" that the Alien Tort Statute "may allow for corporate liability" and its decision in Kiobel "appears to swim alone against the tide."

The Bottom Line

As mentioned above, Jesner will be the second case in five years in which the Supreme Court has granted review from the Second Circuit to consider the scope of the Alien Tort Statute. In Kiobel, the Supreme Court ruled that the statute presumptively did not apply to wholly extraterritorial conduct. In that case, the plaintiffs were citizens of Nigeria who claimed that various foreign oil-exploration companies cooperated with the Nigerian government to suppress resistance to oil development in the country. The Supreme Court's ruling barred the plaintiffs' claims because they were based entirely on events that occurred abroad, but did not address the underlying issue of corporate liability.

Resolving the issue of U.S. corporate liability for potential violations of international norms could have a significant impact on the burgeoning field of corporate social responsibility-related litigation. The number of claims being brought and the jurisdictions in which they are being filed is on the increase, both in the United States and abroad. The increase in NGO and grass-roots activism and greater sensitivity to human rights issues generally, coupled with the greater ease with which potential violations can be investigated, documented and communicated in the internet, social media and smart-phone era, is increasing litigation risk. In addition, litigation risk is increasing as a result of new CSR legislation and the increase in corporate CSR disclosures.

Although a few circuits have already held that corporations can be liable under the Alien Tort Statute, the majority have not yet addressed this question. If the Supreme Court decides that corporate liability exists under the Alien Tort Statute, we could see a significant expansion of litigation across the country by plaintiffs' firms, NGOs, and others to file suit against corporations for perceived human rights violations. Accordingly, companies should watch for the Supreme Court's decision in Jesner. And, although companies cannot insulate themselves against the risk of claims for human rights violations, companies can mitigate that risk through thoughtful compliance programs that take human rights issues and the related litigation risk into account.

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
Similar Articles
Relevancy Powered by MondaqAI
Pepper Hamilton LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Pepper Hamilton LLP
Related Articles
 
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions