Alien Tort Statute Does Not Create Claim Against Corporation for Alleged Violations of Customary International Law

The U.S. Court of Appeals for the Second Circuit, in Kiobel, et al. v. Royal Dutch Petroleum Co., et al., 06-4800-cv, 06-4876-cv (2d Cir. 9/17/10), became the highest court in the land (so far) to decide the question whether the Alien Tort Statute, 28 U.S.C. § 1350, subjects a corporation (as opposed to natural persons) to liability.  The majority (Cabranes, Jacobs, JJ.) hold that it does not.  Judge Leval disagrees, but he concurs in the judgment of dismissal on other grounds.  The decision presents an exhaustive discussion of the history of the ATS, more modern incarnations including the sources of law underpinning the Nuremberg trials and other modern treaties, and the entire subject of corporate liability for alleged violations of human rights.  Judge Cabranes majority opinion runs 50 pages; Judge Leval’s concurrence (only in the judgment) runs 88 pages.  The vehemence of Judge Leval’s opinion, and the majority’s pointed response, is extraordinarily rare, if not unique, and shows a depth of feeling the issues of human rights violations and the rule of law engender (though, frankly, we predict these eminent jurists will look back on and regret some of the internecine sniping).

For purposes of international litigation analysis, the decision contains several important rulings or points of discussion applicable to international litigation generally:

  • The majority explains that the ATS is “a jurisdictional provision unlike any other in American law and of a kind apparently unknown to any other legal system in the world”.  It reaches tort actions, brought by aliens (only), for violations of the law of nations, which is also called “customary international law”.  This law includes, says the Court, war crimes and crimes against humanity.  Following the U.S. Supreme Court’s decision in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the only Supreme Court decision on the ATS, the Second Circuit was prepared to recognize claims based on more than the three offenses recognized when the ATS was enacted in 1789 (safe conduct, infringement of the rights of ambassadors, and piracy).  It was prepared to recognize claims “based on the present-day law of nations” provided that the claims rest on “norm[s] of international character accepted by the civilized world and defined with a specificity comparable to the features of the 18th-century paradigms [the Court had] recognized”. 
  • At the same time, the Court determined that it must look to international law to determine whether a particular class of defendant (such as a corporation) can be liable under the ATS.  The court’s holding is that “the concept of corporate liability for violations of customary international law has not achieved universal recognition or acceptance as a norm in the relations of States with each other”.  Accordingly, the ATS does not reach such conduct.
  • The Court finds that the defect in the claim against corporations is a failure of subject matter jurisdiction, rather than that the plaintiffs failed to state a claim under the ATS.  The Second Circuit is firm that the issue is one of subject matter jurisdiction, and on this the concurrence does not appear to dissent.  Although the decision cites the U.S. Supreme Court’s decision in Morrison v. National Australia Bank, No. 08-1191 (U.S. 6/24/10), Kiobel does not address whether, as Morrisonmay have taught in the context of analyzing the exraterritorial reach of a federal securities claim, the issue whether the ATS reaches the conduct of corporations is not one of the power of the court to decide the issue but rather one for failure to state a claim.
  • Weighing in on the growing debate on the use of affidavits for determining non-U.S. law, both the majority and concurrence discuss the use of affidavits submitted by recognized experts in addition to treatises or other external works.  The majority states that “we are mindful that such works are, in the nature of things, ‘subsidiary’ or secondary sources of international law, ‘useful in explicating or clarifying an established legal principle or body of law,’ by ‘shed[ding] light on a particular question of international law,’ or on the primary sources of international law, which are ‘the documents or acts proving the consent of States to its rules’ (footnote 47).  In a quip (in our view both simple yet profound), the majority then states:  “we fail to see how statements made in an affidavit, under penalty of perjury, are any less reliable than published works whose accuracy is confirmed only by efforts of the student staff of law journals”.  See our post of 9/13/10 on the Seventh Circuit’s recent discussion of this same issue.  
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