In an important decision for companies that do business in developing nations, the Supreme Court held 17 April 2013 in Kiobel v. Royal Dutch Petroleum Co. that the Alien Tort Statute (ATS) does not authorize plaintiffs to sue in U.S. federal court in cases where all the relevant conduct occurred outside the United States. Although the plaintiffs’ bar may try to argue that the Chief Justice’s opinion for the Court leaves open several questions, there is no doubt that the number of viable ATS cases has been significantly reduced.
Kiobel involves the ATS, a jurisdictional statute dating back to the Judiciary Act of 1789. It provides, in full, that “the district courts shall have original jurisdiction of 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.” The statute lay near-dormant for close to 200 years until the 1980s, when it was revived by the plaintiffs’ bar as a way to sue companies in U.S. courts for their business practices in the developing world.
The facts in Kiobel are typical of how the plaintiffs’ bar has come to use the ATS. The Kiobel plaintiffs are Nigerians who objected to oil exploration by a Royal Dutch Petroleum subsidiary in Nigeria. The plaintiffs allege that Royal Dutch Petroleum enlisted the Nigerian government to suppress their protests and provided material support to the Nigerian government’s purported human rights atrocities against protestors. But rather than sue in Nigeria — where the acts occurred — or the Netherlands — where Royal Dutch Petroleum is headquartered — the plaintiffs brought suit in the Southern District of New York, asserting jurisdiction under the ATS.
The Second Circuit concluded that the plaintiffs’ claims should be dismissed because the ATS confers jurisdiction over suits against natural persons only, not corporations. The Supreme Court initially granted certiorari on that question. But after briefing and oral argument, the Court requested supplemental briefing and argument on a separate question: whether and under what circumstances the ATS applies to conduct that takes place outside of the U.S.
The parties’ supplemental briefing on that issue focused heavily on the “presumption against extraterritoriality.” This presumption — which the Supreme Court has increasingly emphasized over the past few terms when construing statutes — sets forth a clear rule of interpretation: “when a statute gives no clear indication of an extraterritorial application, it has none.” The rule reflects the “presumption that U.S. law governs domestically but does not rule the world.” By faithfully applying it, the presumption ensures U.S. courts will not adjudicate the legality of conduct that occurred in foreign nations unless Congress has clearly stated that it wants the courts to do that. In their supplemental briefing, the plaintiffs argued that the presumption has no bearing on the ATS because, among other things, the ATS’s language and context makes clear that Congress meant to reach abroad. The defendants argued that the presumption applies and that nothing in the ATS overcomes it.
The Court, in an opinion by Chief Justice Roberts and joined by Justices Scalia, Kennedy, Thomas, and Alito, agreed with the defendants that the presumption against extraterritoriality applies to the ATS and that nothing in ATS’s text, history, or purpose overcomes it.
The Court first held that the ATS, like any other statute of Congress, is subject to the usual presumption against extraterritoriality. The majority then concluded that the ATS did not overcome the presumption. Beginning with the ATS’s text, the Court determined that simply granting jurisdiction over torts “committed in violation of the law of nations” was not a sufficiently “clear indication” that Congress intended the statute to apply to foreign conduct. That is because torts “committed in violation of the law of nations” can just as easily be committed inside the U.S. as they can be abroad. Nor did the Court find the presumption trumped by the statutory phrase “any civil action.” Drawing on its precedents, the Court held that such an elastic formulation offered no “clear indication” that Congress would have wanted federal courts to adjudicate the legality of foreign conduct.
The Court found further support for its holding in the ATS’s history. It explained that Congress was motivated to enact the ATS after hearing about torts committed against foreign officials and ambassadors in the U.S. , not abroad. And while the ATS is generally understood to extend to acts of piracy committed on the high seas — and thus outside the jurisdiction of the U.S. — piracy on the high seas is also outside the jurisdiction of any nation. The Court therefore concluded that the ATS’s historic concern with piracy is not “a sufficient basis for concluding that other causes of action under the ATS reach conduct that occurs within the territory of another sovereign.”
Finally, the Court emphasized that nothing in the text or history of the ATS suggests that Congress in 1789 enacted the ATS to make the U.S. a uniquely hospitable jurisdiction for the enforcement of international norms. Instead, the statute’s history suggests that it was enacted because the U.S. was embarrassed that under then-existing law, there was no way to ensure that torts against foreign officials committed in the U.S. could be punished in the federal courts.
Having concluded that the ATS does not apply to extraterritorial conduct, the Court then turned to the question whether the Kiobel plaintiffs’ claims were impermissibly extraterritorial. The Court found that an easy question; it concluded in a single paragraph that the claims were invalid because “all the relevant conduct took place outside the United States.” But the Court went out of its way to emphasize that “even where
[ plaintiffs’ ] claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application.” And although the Court did not elaborate, it noted that “[ c ]orporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices” to confer ATS jurisdiction over the corporation.
In a separate concurring opinion, Justice Kennedy emphasized that the Court’s opinion was “careful to leave open a number of significant questions regarding the reach and interpretation” of the ATS. In particular, Justice Kennedy noted that other statutes addressing human-rights abuses, such as the Torture Victim Protection Act, must have their extraterritorial application judged in the specific context of the particular statute. Furthermore, Justice Kennedy suggested that “[ o ]ther cases may arise with allegations of serious violations of international law principles protecting persons, cases covered neither by the [ Torture Victim Protection Act ] nor by the reasoning and holding” of the Court’s opinion. “[ I ]n those disputes,” Justice Kennedy wrote, “the proper implementation of the presumption against extraterritorial application may require some further elaboration and explanation.”
Justices Alito and Thomas, meanwhile, wrote separately to emphasize that, in their view, an ATS case will impermissibly allege extraterritorial conduct — and thus be barred — unless “the domestic conduct is sufficient to violate an international law norm.”
Finally, in a concurring opinion that agreed only with the result the Court reached, Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, concluded that jurisdiction in ATS cases should not be decided based on the presumption against extraterritoriality, but instead on “principles and practices of foreign relations law.” That framework would endow the ATS with a scope far broader than the Court endorsed. According to Justice Breyer, ATS jurisdiction would be satisfied whenever any of the following three circumstances exist: “(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 interest,” including “a distinct interest in preventing the United States from becoming a safe harbor . . . for a torturer or other common enemy of mankind.”
Justice Breyer’s concurring opinion nevertheless agreed with the Court that, even under his more expansive approach, the plaintiffs’ claims could not be maintained under the ATS. And even Justice Breyer’s opinion agreed that other defenses, such as forum non conveniens and comity, limit the ATS’s reach.
The Court’s opinion conclusively resolves two broad questions that had divided the courts: Does the presumption against extraterritoriality apply to the ATS and does the ATS overcome it. The Court held that the presumption applies and that the ATS does not overcome it. But its decision leaves room for questions about application: Under the Kiobel test, to what extent must ATS claims “touch and concern the United States” before they “have sufficient force to displace the presumption of extraterritorial application?”
Here, it is important to note that the Kiobel majority grounded its opinion in the reasoning in the Court’s 2010 opinion in Morrison v. National Australia Bank, Ltd. And in that opinion, the Court held that “the presumption against extraterritorial application would be a craven watchdog indeed if it retreated to its kennel whenever some domestic activity is involved in the case.” Instead, the presumption against extraterritorial application can be overcome only when the conduct that is “the ‘focus’ of congressional concern” under the statute takes place in the U.S. Thus, the question in the cases to come is what the focus of Congress’s concern was in passing the ATS and where the defendants’ conduct related to that concern took place. But whatever the plaintiffs’ bar might contend are the answers to those questions in future cases, it appears plain that so-called “foreign-cubed” claims — claims where the plaintiffs are foreign, the defendants are foreign, and the conduct is foreign — are no longer viable. And the viability of ATS litigation with even more of a domestic component has now been called into serious question.
Moreover, Kiobel is notable because it does not repudiate any of the other potential defenses available to businesses facing an ATS suit. The question whether the ATS applies to corporations, for example, is still open, and companies have other defenses — such as forum non conveniens, comity, and exhaustion — that they can combine with Kiobel to secure early dismissal of ATS actions.