In a much-anticipated decision concerning the reach of the Alien Tort Claims Act (“ATS“) to foreign actors, the US Supreme Court has concluded that ATS claims alleging a violation of international law “occurring outside the United States” are “barred.” Kiobel v. Royal Dutch Petroleum Co.— U.S. —, No. 10–1491, slip op. at 14 (Apr. 17, 2013). Applying the presumption against extraterritorial application of US laws, a five-justice majority held that foreign nationals could not sue Dutch, British, and Nigerian-based corporations in US federal court based on claims of aiding and abetting human rights violations committed in Nigeria. Thomas Riley and Michael Kelly of our New York office comment on the decision.
The ATS grants jurisdiction to federal district courts over “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” 28 U.S.C. §1350. The ATS permits federal courts to hear a limited category of claims based on violations of well-defined and universally-accepted norms of international law. Sosa v. Alvarez-Machain, 542 U.S. 692 (2004).
In the opinion under review, the US Court of Appeals for the Second Circuit announced a bright-line rule prohibiting ATS cases against corporate defendants. Although certiorari on this question was granted by the Supreme Court, its decision did not explicitly address either the holding or the rationale adopted by the Second Circuit. Rather, the Supreme Court focused on the extraterritorial implications of ATS jurisdiction.
Kiobel bars ATS claims in “foreign-cubed” cases: where the plaintiff, the defendant, and the allegedly tortious conduct lack any connection to the US. The majority opinion by Chief Justice Roberts expresses concern over “unwarranted judicial interference in the conduct of foreign policy” in any case under the ATS, especially where the conduct in question occurs “within the territory of another sovereign.” Kiobel, slip op. at 5-6.
The majority decision left open the possibility of ATS claims which “touch upon and concern” the territory of the US provided that they “do so with sufficient force to displace the presumption against extraterritorial application.” Kiobel, slip op. at 14 (citing Morrison v. National Australia Bank Ltd., 561 U. S. —, 130 S.Ct. 2869 (2010)). In short, whether and under what circumstances ATS claims premised on foreign conduct remain viable against US-based defendants – or in cases which have some greater connection to the US – was not conclusively decided in Kiobel.
Indeed, a concurring opinion by Justice Breyer, in which three other justices joined, concluded that ATS claims are permissible “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 ….” See Kiobel, slip op. at 7 (Breyer, J.) (concurring in the judgment). Citing The Restatement (Third) of Foreign Relations, Justice Breyer concluded that, subject to a requirement of “reasonableness,” a nation may apply its law “not only (1) to conduct that takes place [or to persons or things] within its territory but also (2) to the activities, interests, status, or relations of its nationals outside as well as within its territory (3) to conduct outside its territory that has or is intended to have substantial effect within its territory, and (4) to certain foreign conduct outside its territory . . . that is directed against the security of the state or against a limited class of other state interests.” Id. at 6-7 (internal quotations omitted).
The four concurring justices agreed with the majority’s judgment because of the following factors:
- The plaintiffs were not United States nationals but nationals of other nations.
- The conduct at issue took place abroad.
- The plaintiffs alleged, not that the defendants directly engaged in acts of torture, genocide, or the equivalent, but that they helped others (who were not American nationals) to do so.
- The defendants were foreign corporations, whose only presence in the United States (apart from shares traded on the New York Stock Exchange) consists of an office in New York City (actually owned by a separate but affiliated company) that helps to explain their business to potential investors.
Because the Court focused on these threshold considerations of extraterritoriality, Kiobel did not resolve whether the ATS permits claims against corporations, an issue that has divided the federal appellate courts. Accordingly, the Second Circuit’s holding and rationale, that international law norms do not support corporate liability under the ATS, were undisturbed by the Supreme Court’s decision, and retain their precedential value in that circuit.
As a final caveat to the majority’s decision, Kiobel speaks only to the viability of claims for breaches of international law pursued in US federal court. Thus, even where ATS-type cases are barred under Kiobel, plaintiffs may seek to bring parallel claims for violations of international law in the state courts of the US.
Kiobel adopts an approach consistent with the presumption against extraterritorial application of US laws, limiting ATS claims in a number of circumstances. The decision, however, leaves open questions: the Court did not resolve the circuit split over whether corporations may be sued under the ATS nor did it decide whether aiding and abetting liability presents a cognizable claim in ATS cases. Finally, the decision provides limited guidance with respect to ATS claims that “touch upon and concern” the US.