On April 17, 2013, the U.S. Supreme Court issued its decision in Kiobel v. Royal Dutch Petroleum, unanimously holding that claims brought by Nigerian plaintiffs against certain Dutch, British, and Nigerian defendants under the Alien Tort Statute ("ATS") for alleged human rights abuses committed in Nigeria must be dismissed. Relying on the Court's recent decision in Morrison v. National Australia Bank Ltd.,1 the Court held that the presumption against the extraterritorial application of U.S. law applied to the ATS and there was no indication that Congress intended the statute to have extraterritorial effect. The Court therefore concluded that ATS claims only could be asserted in cases which "touch and concern the territory of the United States . . . with sufficient force to displace the presumption" and accordingly dismissed the plaintiffs' claims because in Kiobel, "all the relevant conduct took place outside the United States."
The Kiobel decision represents a significant curtailing of the scope of ATS litigation. Many commentators previously believed that the ATS applied to activity outside the United States and many of the ATS cases brought in recent years focused on alleged human rights violations with only a limited territorial connection to the United States. Accordingly, by holding that the ATS is subject to the presumption against extraterritorial application and that ATS claims are only viable where they "touch and concern the territory of the United States with sufficient force to displace the presumption," the Court substantially limited the potential ATS exposure of corporate defendants. This is particularly true with respect to foreign corporate defendants, like the Kiobel defendants, that do business in the United States (including being listed on U.S. stock exchanges) but which lack additional links to the country. Although the Court did not provide detailed guidance on what would constitute a sufficient territorial nexus for purposes of ATS jurisdiction, the Court did note that "it would reach too far to say that mere corporate presence suffices" to satisfy the standard. The Kiobel decision, however, is unlikely to eliminate potential ATS exposure for corporate defendants. Because the Court declined to provide comprehensive guidance on what would constitute a sufficient territorial nexus for ATS jurisdiction, plaintiffs are still likely to bring cases that have a greater nexus to the United States than was present in Kiobel.
The ATS is a jurisdictional statute which allows foreign plaintiffs to bring suit in United States federal court for torts committed in "violation[s] of the law of nations or a treaty of the United States."2 Over the past 30 years, more than 120 ATS lawsuits have been brought in U.S. courts against corporate defendants. The vast majority of these cases have alleged that the corporate defendants aided and abetted, or otherwise contributed to, human rights abuses committed by foreign governments, and have sought millions of dollars in compensatory and punitive damages. As a result, the ATS has provided the single largest source of human rights-related legal risk for corporations on a global basis over the past three decades.
Kiobel involved claims brought by Nigerian citizens against a Nigerian corporation, Shell Petroleum Development Company of Nigeria, Ltd. ("SPDC"), and certain British and Dutch companies that indirectly hold shares in SPDC,3 alleging that SPDC assisted the Nigerian government in committing human rights violations against Nigerian citizens in Nigeria in the mid-1990's. Plaintiffs sought and were granted asylum in the United States and in 2002 commenced an action under the ATS in U.S. District Court in New York. After an initial finding by the District Court that federal jurisdiction existed over plaintiffs' ATS claims, the case was certified to the U.S. Court of Appeals for the Second Circuit on an interlocutory appeal.
On appeal, the Second Circuit ordered dismissal of the complaint for lack of subject matter jurisdiction on the grounds that corporations could not be subject to suit under the ATS.4 The panel reasoned that the ATS was a jurisdictional statute which placed a threshold burden on plaintiffs to show that corporations were liable under customary international law norms for human rights abuses. Concluding there was no such norm under customary international law, the panel dismissed the complaint.5 In separate cases, subsequent decisions by the U.S. Courts of Appeals for the District of Columbia and Seventh Circuits explicitly rejected this reasoning.6
The initial briefing and argument before the U.S. Supreme Court — which attracted dozens of amicus briefs from trade associations, human rights organizations, academics, and sovereign governments around the world — addressed the question of corporate liability for human rights violations under customary international law. In a rare move, however, the Court ordered additional briefing and argument on the extraterritorial reach of the ATS — specifically, whether and under what circumstances the ATS allows U.S. courts to recognize a cause of action for violations of the law of nations occurring within the territory of a sovereign other than the United States. The Court ultimately ruled on this second question, and did not directly address the question of corporate liability.
Although the Court unanimously affirmed the Second Circuit's dismissal of plaintiffs' claims, the Court split on its reasoning and issued four separate opinions. The majority opinion, authored by Chief Justice Roberts and joined by Justices Scalia, Kennedy, Thomas, and Alito, relied on Morrison v. National Australia Bank Ltd. and reasoned that the general presumption against the extraterritorial application of U.S. law applied equally to the ATS. Finding nothing in the history, text or purpose of the statute which indicated that Congress intended for the ATS to be applied extraterritorially, the majority concluded there was no basis for applying the ATS to alleged violations of the law of nations occurring entirely outside the United States. The majority therefore dismissed the plaintiffs' claims, observing that in this case, “all the relevant conduct took place outside the United States,” and left it for future courts to determine when an ATS claim might be able to displace the presumption against extraterritorial application in a particular case if there was a greater territorial nexus with the United States. The majority, however, did note that "[c]orporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices" to displace the presumption against extraterritorial application.
Although he joined in the majority opinion, Justice Kennedy issued a separate concurring opinion, in which he emphasized the limited scope of the majority opinion and observed that "[o]ther cases may arise with allegations of serious violations of international law principles protecting persons . . . and in those disputes the proper implementation of the presumption against extraterritorial application may require some further elaboration and explanation."
Justice Alito, joined by Justice Thomas, also issued a concurring opinion in addition to joining the majority opinion. In his concurring opinion, Justice Alito endorsed a more restrictive view of ATS jurisdiction based on the presumption against extraterritoriality than the one set out in the majority opinion, asserting that a putative ATS claim should only be able to overcome the presumption against extraterritorial application if the plaintiff alleges U.S.-based conduct that is sufficient to violate international human rights law.7
Finally, although concurring with the Court's judgment to dismiss plaintiffs' claims, Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, issued a separate opinion disagreeing with the Court's reasoning and instead asserting that the case should turn on principles of foreign relations law rather than application of the presumption against extraterritoriality. Specifically, Justice Breyer would find ATS jurisdiction where: (1) the alleged tort occurs on American soil; (2) the defendant is an American national; or (3) the defendant's conduct substantially and adversely affects an important American national interest, including a distinct interest in preventing the U.S. from becoming a safe haven for a torturer or other common enemy of mankind. In light of the "minimal and indirect" connections the Kiobel parties and claims had to the United States, Justice Breyer found none of these three criteria were satisfied in this case, and thus agreed dismissal of the plaintiffs' claims was appropriate.
The Future of ATS
Although many of the ATS cases brought in the last 30 years are likely no longer viable post-Kiobel, the majority opinion — as Justice Kennedy observed in his concurrence — leaves open many "significant questions regarding the reach and interpretation of the" ATS. In particular, while Kiobel conclusively determines that the ATS may not be given extraterritorial effect, and that ATS claims are not viable when all the relevant conduct takes place overseas, it does not resolve the question of what constitutes an extraterritorial ATS claim. Future ATS litigation, therefore, is likely to focus, at least as a threshold matter, on whether the ATS claims at issue possess meaningful territorial nexus with the United States sufficient to justify ATS jurisdiction. Future ATS plaintiffs are likely to press a number of key arguments regarding when and under what circumstances such a jurisdiction-granting nexus exists, such as the extent to which multi-national corporations (including non-U.S. corporations) may be subject to ATS liability (i) where the conduct or decisions giving rise to such liability occurred in the United States in whole or in part; or (ii) where the conduct or decisions giving rise to such liability were performed by a U.S. corporation or other U.S. nationals in whole or in part.
The case is Kiobel v. Royal Dutch Petroleum Co., et al., No. 10-1491 (Apr. 17, 2013).