In a 5-4 decision in Jesner v. Arab Bank (No. 16-499), the US Supreme Court held that foreign corporations are not subject to liability under the Alien Tort Statute (ATS). Clarifying an issue left open by the Court’s prior decision in Kiobel v. Royal Dutch Petroleum Co., 569 U. S. 108 (2013), the majority (Justice Kennedy joined by Justices Roberts, Thomas, Alito, and Gorsuch), engaged in a lengthy analysis of complex international law and US foreign policy concerns juxtaposed with more routine questions of statutory interpretation. In the end, the majority concluded “that foreign corporations may not be defendants in suits brought under the ATS.” Slip. Op. at 27. The dissent (authored by Justice Sotomayor), argues that corporations should not be absolved from liability “for conscience-shocking behavior” (Dissent, Slip Op. at 1), and goes on to criticize the majority’s interpretation of the ATS on a number of fronts.
Although the Jesner decision appears to foreclose the ATS as a vehicle for hauling foreign business entities into US courts, it is unlikely to impact other established jurisdictional bases for lawsuits that may raise foreign policy concerns, including:
“Extraterritorial” Federal Statutes. In Jesner and Kiobel, the Court held “that the presumption against extraterritoriality applies to claims under the ATS, and that nothing in the statute rebuts the presumption.” Slip Op. at 10 (citing 569 U.S. at 124). On the other hand, the presumption against extraterritoriality can still be overcome where a statute includes an “affirmative indication” by Congress to give it extraterritorial effect. See Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247, 265 (2010).
Treaties. Many US treaties (including bilateral investment treaties), have dispute resolution mechanisms that serve as viable options for securing legal recourse with respect to contract breaches and torts committed by foreign entities. Where treaties require aggrieved parties to pursue claims in international arbitration, domestic courts are available for award recognition and enforcement litigation.
Foreign Sovereign Immunities Act (FSIA). The FSIA gives US courts jurisdiction over foreign states and state-owned entities under some circumstances. See 28 U.S.C. §§1603, 1330. These circumstances include: (i) waiver of immunity, (ii) claims arising from commercial activities in the US, (iii) property expropriation, (iv) certain personal injury and property torts, and (v) harm resulting from terrorist acts (or material support for such acts). See 28 U.S.C. §§1605, 1605A.
Jesner has significant implications for foreign and domestic plaintiffs seeking judicial relief from foreign corporations under the ATS, but the impact of the decision is unlikely to impact these other pre-existing mechanisms for seeking relief from abroad.