By Joanna Kyriakakis
Last Tuesday the US Supreme Court heard oral arguments in the case of Kiobel v Royal Dutch Petroleum. The case is significant as it will determine whether the Alien Tort Statute (ATS) applies to corporations.
Dating from 1789, the ATS is a unique and controversial US law that allows non-US citizens to sue in tort for violations of norms that have reached a high level of uniform and specific prohibition in international law (referred to in the statute as the ‘law of nations’). Because of the high threshold for a norm to constitute part of the law of nations, the behaviours that are the subject of ATS litigation are serious human rights abuses uniformly condemned by all states, such as torture, crimes against humanity and genocide.
In this case the allegations are that Dutch and British companies, collectively known as Shell, assisted the Nigerian Government in a violent crackdown on environmental activists in the Niger Delta in 1993-95.
But are corporations, as opposed to natural persons, liable under this law? Since the mid-1990s, numerous lower courts have either implicitly or explicitly taken the view that they are. This case throws that position into doubt.
The question is an important one. In a legal landscape in which few effective judicial forums are available to victims of corporate related human rights abuses, the ATS is unique as a means of privately enforcing violations of the law of nations committed by, or with the participation of, corporations.
But with Kiobel the future of this mechanism hangs in the balance.
Incorporation as Immunity
If the Supreme Court determines that corporations are excluded from the ambit of the ATS, it is likely to be viewed in the public imagination as evidence that incorporation equals immunity.
There is already evidence of this sentiment in reporting on the case. It is a view neatly summarised by protest banners that could be seen outside the Supreme Court stating: ‘Want to get away with murder? Incorporate’.
Comments from the bench on Tuesday suggest that this concern is shared by at least some of the Justices. In questions posed to counsel appearing on behalf of the Companies, Justice Breyer pointed to the hypothetical scenario of Pirates Incorporated to illustrate his concern.
Do you think in the 18th century if they’d brought Pirates, Incorporated, and we get all their gold, and Blackbeard gets up and he says, oh, it isn’t me; it’s the corporation — do you think that they would have then said: Oh, I see, it’s a corporation. Good-bye. Go home.
To which the respondents’ replied, ‘yes, the corporation would not be liable’.
In a country where it was recently held that corporations are persons entitled to the full protection of First Amendment rights to freedom of speech, to the extent that Congress is not permitted to set limits on corporate political expenditures, that this same court may find them immune from the liabilities created by the ATS seems highly incongruous. How can one and the same entity enjoy the fundamental rights of personhood but not the corresponding responsibilities?
Yet the matter is not as simple as this comparison suggests and lies in the complex of legal issues that this case throws open.
For starters, the parties disagree as to the proper source of law that applies to the question of which entities are liable for violations of the law of nations.
The petitioners, with the support of the Federal US Government, contend that the proper source is US federal common law. They make this claim on the basis that international law does not address the issue of which actors can violate a norm of international law but rather, as a general rule, only prescribes the conduct itself. Once a norm of the law of nations has been violated, they claim, international law leaves it to states to determine the method of enforcement. And the US has long enforced tortious liability on corporations for torts committed by corporate agents.
The respondents disagree. Pointing to the unique nature of the ATS as a statute applying the law of nations and not standard domestic tort law, they argue that the plaintiffs’ must positively establish a norm of corporate liability within the law of nations if the ATS is to apply to corporations. International law, they claim, unlike US law does meaningfully distinguish between natural persons and legal ones. And for various reasons, no principle of corporate liability yet exists in international law.
If the court determines that it is indeed international law which determines the core question in this case, the plaintiffs’ position is undoubtedly more precarious. To be sure there are mixed views in the literature as to whether it is possible (or even necessary) to point to positive evidence of a norm of corporate liability under international law in order to prove that corporations are directly bound by that body of law. Among other things, there are disputes over what principles can be drawn from the treatment of industry in post World War II jurisprudence and what can be taken from the recent decision not to include corporations in the International Criminal Court.
Extraterritoriality and the ATS
To make matters more complicated, the respondents and their amici have also raised a range of broader propositions that, if accepted, would largely nullify the ATS in cases involving corporate conduct outside of the US.
The ATS has long been controversial, largely because of its broad extraterritorial reach that permits cases to be brought in US federal courts irrespective of where the conduct occurred. All that is required is that the defendant has some presence in the United States. In other words it constitutes a form of civil universal jurisdiction.
Particularly in the briefs filed by the United Kingdom, the Netherlands and Germany were calls for the Court to directly confront whether the extraterritorial reach of the ATS is impermissible under international law.
There was clear interest among the bench on this broader question. For example, in questioning counsel for the plaintiffs, Justice Alito stated:
The first sentence in your brief and the statement of the case is really striking: “This case was filed by 12 Nigerian Plaintiffs who alleged that Respondents aided and abetted the human rights violations committed against them by the Abacha dictatorship in Nigeria between 1992 and 1995.” What does a case like that — what business does a case like that have in the courts of the United States?
In response to repeated questioning along those lines, plaintiff counsel was at pains to return attention to the subject at hand noting that the Court did not have the benefit of full briefing on extraterritoriality. Nonetheless, the direction of questioning does suggest that the Court may take this opportunity to address the issue, lying as it does at the core of the controversies surrounding ATS litigation in recent years.
Another issue raised, primarily in corporate briefs, was for the Court to put substantial limits on aiding and abetting as a form of participation recognised under the ATS. The proposition is that aiding and abetting, if it attracts ATS liability at all, should only do so if the aider could be shown to have assisted with the purpose of furthering the violation. As in most instances corporate conduct is motivated by profit maximisation, such a principle would be unlikely to cover most instances of corporate participation in human rights abuses. By raising the issue, corporate amici explicitly pre-empt the problem that individual business executives may be the subject of future litigation even if the respondents succeed in this case.
Comments by plaintiff lawyer, Paul Hoffman, in a panel conversation the day after the hearing indicate that, whatever the outcome in this case, they will continue to pursue corporations implicated in human rights abuses through US judicial avenues. One option already noted would be to litigate individual corporate executives. In many respects, this option may be less appealing to the business world.
However, in the context of corporate misconduct, deterrence is better achieved by litigating the corporate entity rather than individuals. Further, identifying the individuals to litigate in the context of corporate misconduct is likely to create challenges for plaintiff lawyers. Nobel prize winning economist Joseph Stiglitz outlines the commercial case for regulating business abroad via the vehicle of corporate liability under the ATS in a brief to the Court.
Another option also suggested by Hoffman is to utilise ordinary state tort law. However, as noted in a brief submitted by former ATS plaintiffs, this raises the problem of fair labelling. While it is true that every act of torture, for example, also constitutes the tort of assault, the latter label does not fairly acknowledge the extent of the wrong at issue.
So there is much to anticipate in the months to follow. While Kiobel may not stop victims from targeting businesses implicated in serious human rights abuses, it will set the parameters for future action.
The Supreme Court decision in Kiobel is expected to be handed down in June 2012.
Update 5 March 2012
It seems we will be waiting for longer than originally anticipated for the decision in Kiobel. The Supreme Court on Monday issued an order restoring the case to the calendar for further argument on the question of ‘whether and under what circumstances the [ATS] allows courts to recognize a cause of action for violations of the law of nations occuring within the territory of a sovereign other than the United States’.
The Court will use the opportunity afforded by this case to address at least one, and possibly both, of the broader issues raised by the respondents and their amici. The question posed indicates that the Court intends to directly confront the phenomenon of US Courts exercising jurisdiction over foreign persons where the victim is a foreigner and for conduct in a foreign state. The language of the order also suggests that the issue of aiding and abetting may be considered.
Both issues will affect the future of ATS cases against corporations and individuals alike, although any decision on aiding and abetting is likely to have particular ramifications for litigating corporate abuses. The case will be listed for further oral arguments during the Court’s next Term commencing October 2012.