The Supreme Court ruled unanimously yesterday in Kiobel v.
Royal Dutch Petroleum, No. 10-1491, 2013 U.S. LEXIS 3159 (Apr.
17, 2013), that a claim under the Alien Tort Statute (ATS), which
relates to civil actions by foreign citizens for violations of the
"law of nations," does not extend to conduct that
occurred on foreign soil. This ruling upheld the U.S. Court of
Appeals for the Second Circuit in its dismissal of an ATS suit
originally filed in the Southern District of New York by Nigerian
plaintiffs against Netherlands-based Royal Dutch Shell PLC (Shell
Oil). The suit alleged complicity in human rights violations
committed against Nigerian civilians in Nigeria's oil-rich
Ogoni region. Specifically, the Supreme Court held that a canon of
statutory interpretation - the "presumption against
extraterritoriality" - applies to claims asserted under the
ATS and that nothing in the statute's text, history or purpose
rebuts that presumption.
The Court emphasized that a finding of extraterritorial ATS reach
could constitute "unwarranted judicial interference in the
conduct of foreign policy" and failed to find any indication
the statute was passed to make the United States a forum to enforce
international norms. The Court also noted that a finding of
extraterritorial jurisdiction under the ATS could provide a
reciprocal basis for other nations to hale U.S. citizens into their
courts for conduct occurring anywhere in the world, including
conduct occurring in the United States.
Chief Justice Roberts authored the majority opinion, which was
joined by Justices Scalia, Kennedy, Thomas and Alito. Justices
Kennedy and Alito filed concurring opinions noting the narrow scope
of the Court's holding. Justice Thomas joined in Justice
Alito's opinion. Justice Breyer filed an opinion concurring in
the judgment but indicated he would not have relied upon the
presumption of extraterritoriality. Justice Breyer also argued for
a broader statutory interpretation that would allow for the
protection of U.S. citizens and U.S. interests. Justices Ginsburg,
Sotomayor and Kagan joined in Justice Breyer's
concurrence.
The Court's opinion and the concurring opinions can be found here.
Background
Originally enacted as part of the Judiciary Act of 1789, the ATS
allows foreign citizens to bring civil actions "committed in
violation of the law of nations or a treaty of the United
States" in U.S. district courts. The first significant ATS
case was heard by the Second Circuit in Filartiga v.
Pena-Irala, 630 F.2d 876 (2d Cir. 1980). In
Filartiga, the court held that a foreign national could
bring a suit against another foreign national living in the United
States for torture that occurred abroad. In 2004, the Supreme Court
determined in its first - and until Kiobel, only - ATS
case that the ATS confers jurisdiction over lawsuits for certain
limited, serious violations of international law. Sosa v.
Alvarez-Machain, 542 U.S. 692 (2004). Notably, the
Sosa holding did not address whether the ATS applies if
the violations of international law occur in another country.
In Kiobel, novel questions were raised regarding the
proper interpretation of the ATS in the context of corporate tort
liability and customary international law. The Southern District of
New York had initially ruled in 2006 that customary international
law did not define the violations claimed by the Nigerian
plaintiffs with the particularity required by Sosa. On
appeal, the Second Circuit found that corporations cannot be sued
in the same manner as any other private-party defendant under the
ATS.
The Supreme Court granted certiorari in October 2011 to consider
certain questions related to whether the ATS applied to
corporations. In March 2012, the Court ordered a rare second
hearing and supplemental briefing to ponder the issue of whether
and under what circumstances the ATS would allow courts to
recognize a cause of action at all for violations of the law of
nations that occur overseas. Reargument before the Court took place
on October 1, 2012, and yesterday's decision has been much
anticipated.
Looking Ahead
The Court's ruling in Kiobel has significant
implications for U.S. corporations that do business on foreign
soil. Mining companies, oil companies, pharmaceutical companies,
manufacturers and financial institutions have all been the subject
of ATS claims. Due to the nature of the allegations in a typical
ATS case, the potential damages sought have historically been quite
substantial. The determination that the ATS does not have
extraterritorial reach indicates that, for the time being,
corporations will not likely face the same level of potential
liability from their overseas activities under this statute as they
have in the recent past. However, the narrow holding, the issues
raised in the concurring opinions and the submission of voluminous
amicus briefs to the Court all suggest a strong likelihood of
continued legal challenges regarding overseas violations of
international law. U.S. individuals and companies that are
considering initiating overseas operations or those already engaged
in overseas operations would be well served to carefully monitor
their overseas operations to be certain that they are not running
afoul of other similar U.S. laws and that they are in compliance
with any foreign laws that might subject them to the same sort of
tort liability that, until yesterday, has been vigorously pursued
in the United States under the ATS.
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