The Alien Tort Statute and Corporate Liability: Looking Ahead to the Supreme Court Decision in Kiobel
By: Maria Florencia Librizzi[*]
The Supreme Court will soon decide the fate of litigation seeking to hold U.S. corporations accountable under the Alien Tort Statute (ATS) for aiding and abetting human rights abuses overseas. In September 2010, the Second Circuit held in Kiobel v. Royal Dutch Petroleum that the statute did not apply to corporations. Since then, several other circuits have ruled otherwise, leading the Supreme Court to grant certiorari in Kiobel in October 2011. Oral argument is scheduled for Tuesday, February 28.
The outcome of this case will be profoundly important. If the Court affirms the Second Circuit’s majority opinion, alien victims will no longer be able to sue corporations under the ATS. In many cases corporations will be free to profit from overseas human rights violations, while safeguarding their assets against compensation claims.
Looking ahead to the Court’s decision, I summarize below the evolving jurisprudence of the ATS, including the circuit split over the statute’s applicability to corporations and the mens rea standard for aiding and abetting liability. If the Court limits itself to the Questions Presented in the certiorari petition, it will decide only whether the ATS applies to corporations. However, the Court may also resolve other points of contention among the circuits, including the mens rea standard for aiding and abetting liability. After reviewing the case law, I conclude with several arguments—instrumental, descriptive, and policy—in favor of recognizing corporate liability under the ATS.
The ATS gives federal district courts jurisdiction over civil actions filed by aliens for torts committed in violation of international law. Largely unused for almost two centuries after its enactment in 1789, over the last 30 years the ATS has spurred a proliferation of lawsuits against U.S. corporations for allegedly aiding or abetting foreign governments in the commission of human rights violations.
In these suits, U.S. courts have circumscribed the nature of international norms that fall within the jurisdictional grant of the ATS. According to Filartiga v. Peña-Irala, the ATS is to be interpreted as opening “the federal courts for adjudication of the rights … recognized by … well-established, universally recognized norms of international law.” The Supreme Court first decided an ATS case in 2004, holding that “courts should require any claim based on the present-day law of nations to rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to the features of the 18th-century paradigms we have recognized.” The Supreme Court’s decision in Sosa made clear that federal courts have authority to recognize claims based on current interpretation of customary international law, but not claims based on less definite international norms.
The applicability of the ATS to corporations has been one of the major topics of debate within the courts. While analyzing in Sosa whether an international norm was sufficiently definite to support a cause of action, the Supreme Court noted that “a related consideration is whether international law extends the scope of liability for a violation of a given norm to … a private actor such as a corporation or individual.” The Supreme Court ultimately left open the question of corporate liability, which allowed a circuit split to develop.
Several circuits have found that corporations can be liable under the ATS. In Flomo v. Firestone, for instance, a group of Liberian children alleged that the defendant-corporation and its officers had utilized “hazardous child labor” in violation of customary international law. The Seventh Circuit held in that case that corporate liability was possible under the ATS. Similarly, the Eleventh Circuit stated in Romero that “[t]he text of the Alien Tort Statute provides no express exception for corporations,… and the law of this Circuit is that this statute grants jurisdiction from complaints of torture against corporate defendants.” In Doe, the D.C. Circuit similarly held that corporations are not immune from liability under ATS, noting that “corporate immunity also would be inconsistent with the ATS because by 1789 corporate liability was an accepted principle of tort law in the United States.”
In contrast, the Second Circuit held in Kiobel that corporate defendants cannot be sued under the ATS, as they are not subject to liability under customary international law. In that case, Nigerian residents claimed that the defendants—Dutch, British, and Nigerian corporations engaged in petroleum exploration and production—had aided and abetted the Nigerian government in committing atrocities in violation of international human rights law. Specifically, the plaintiffs alleged the aiding and abetting of (1) extrajudicial killing; (2) crimes against humanity; (3) torture or cruel, inhuman, and degrading treatment; (4) arbitrary arrest and detention; (5) violations of the rights to life, liberty, security and association; (6) forced exile; and (7) property destruction. The majority opinion reasoned that “the potential for civil damages under the ATS arises only if customary international law recognizes that a particular class of defendant is a subject of international law,” and concluded that “corporate liability … is simply not accepted by the civilized world and defined with a specificity comparable to the features of the 18th century paradigms.”
The circuit courts have also applied different standards regarding aiding and abetting liability under the ATS. In particular, there has been disagreement with respect to the mens rea required for aiding and abetting liability. In Khulumani, three groups of plaintiffs sued under the ATS and the Torture Victims Protection Act (TVPA) on behalf of individuals alleging injury arising from corporate participation in South Africa’s Apartheid policies. The Second Circuit held in that case that “a defendant may be held liable under international law for aiding and abetting the violation of that law by another when the defendant (1) provides practical assistance to the principal which has a substantial effect on the perpetration of the crime, and (2) does so with the purpose of facilitating the commission of that crime.” The Court also looked to the last sixty years of practice in international law to find that “aiding and abetting liability, so defined, is sufficiently ‘well-established [and] universally recognized’ to be considered customary international law” for the purpose of the ATS.
In Presbyterian Church of Sudan v. Talisman Energy, Inc., a group of Sudanese plaintiffs sued a Canadian corporation under the ATS, alleging that the corporation had aided and abetted or conspired with the Government of Sudan to commit human rights abuses in connection with the development of oil concessions by the corporation’s affiliates. The Court recalled that “Sosa and our precedents send us to international law to find the standard for accessorial liability.” Applying international law, the Court held that “the mens rea standard for aiding and abetting liability in ATS actions is purpose rather than knowledge alone.” In addition, the Court stated that even when there is sufficient international consensus about liability for purposefully aiding and abetting a violation of international law, that consensus does not necessarily extend to liability for knowingly aiding and abetting the violation. In the instant case, there was evidence that the defendant had partially financed road-building and other infrastructure with knowledge of the government’s human rights abuses, but there was no evidence that those projects were done with unlawful purpose. The Court ultimately held that without proof that the corporation provided substantial assistance to the Government of Sudan with the purpose of aiding the government’s unlawful conduct, the corporate defendant could not be held secondarily liable under the ATS.
The D.C. Circuit, however, decided in Doe that aiding and abetting liability was available under the ATS as it “involves a norm established by customary international law and that the mens rea and actus reus requirements are those established by the ICTY, the ICTR, and the Nuremberg tribunals, whose opinions constitute expressions of customary international law.” In that case, the Court found that the applicable mens rea standard was actual “knowledge.”
In Flomo, the Seventh Circuit stated that its concern was not with corporate liability per se, but rather with “the scope of that liability.” The Court established that corporate liability in these cases has to be limited to violations that are “directed, encouraged, or condoned” at the corporate defendant’s decision-making level.
The Fourth Circuit, in a recent case informed by the analysis in Talisman, adopted the specific intent mens rea standard for accessorial liability. The Court rejected the knowledge standard applied in Doe, noting that the D.C. Circuit had grounded its decision on ICTY and ICTR practice, rather than on the Rome Statute. Thus, the Court followed Talisman’s standard, recalling Sosa’s command that courts must limit ATS liability to violations of international law with definite content and acceptance among civilized nations.
There are many normative reasons for recognizing corporate liability under the ATS. For instance, according to the majority in Kiobel, in order to establish liability under the ATS, the court must find not only a substantive violation of international law, but also a norm under customary international law that permits liability for the relevant type of actor. To determine whether civil liability extends to corporations under international law, the majority looked to the International Military Tribunal (IMT) at Nuremberg, which held only individuals liable (in criminal proceedings). It has been noted, however, that “if the majority’s major premise were true, individual liability at Nuremberg would have been contrary to international law because there was no opinion juris for holding individuals liable for violations of the law of nations at the time of the tribunal.” As it stands, the outcome at Nuremberg demonstrates that there is no need for an actor-type norm to hold the defendant liable. Moreover, as Judge Leval pointed out in his concurrence in the judgment, this issue is highly related to the confusion between criminal and civil liability. The IMT sought to try individuals precisely because criminal liability did not attach to corporations, whereas civil liability did.
Another argument that has been raised for corporate liability is that current American law, as well as the law in many other countries, recognizes the personhood of corporations. In other words, corporations have many of the same rights and obligations that a natural person has. It seems plausible, therefore, that corporations should be amenable to suit under the ATS. This conclusion is consistent with Citizens United v. Federal Election Commission, in which the Supreme Court decided that the “government may not, under the First Amendment suppress political speech on the basis of the speaker’s corporate identity.” By analogy, it is reasonable to conclude that corporations should be held liable when aiding and abetting torts. In this context, a ruling diminishing corporate responsibility for human rights violations would be in tension with the recent ruling protecting corporate rights in the framework of personhood.
Recognizing corporate liability also comports with the United Nations’ Protect, Respect, and Remedy Framework for Business and Human Rights. In his report to the U.N. Human Rights Council, Special Representative John Ruggie laid out the following core principles of the Framework: (1) the state’s duty to protect against human rights abuses; (2) the corporate responsibility to respect human rights; and (3) the need for effective access to remedies. Ruggie’s report recognized that the international community was still in the very early stages of providing more effective protection to individuals and communities against human rights abuses committed by corporations. To support this effort, the report introduced a principles-based conceptual and policy framework. It acknowledged that businesses were a major source of investment and job creation, and that they were capable of generating economic growth and contributing to the realization of a wide range of human rights. At the same time, the report also noted that history has shown “that markets pose the greatest risks—to society and business itself—when their scope and power far exceed the reach of the institutional underpinnings that allow them to function smoothly and ensure their political sustainability.” In that sense, the report frames insufficient corporate responsibility for human rights abuses as a governance gap created by globalization—in other words, a gap between the power of economic forces and the capacity of societies to deal with their negative consequences. “These governance gaps provide the permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation.” Applying the ATS to corporations could serve to narrow that gap by providing reparations to the victims of human rights violations aided and abetted by corporations.
Aside from the normative reasons discussed above for allowing corporate liability under the ATS, there are instrumental or descriptive reasons for such a proposition. From a free market perspective, for instance, there should be an effort to protect corporations that respect human rights, as they may be at an economic disadvantage when they compete with other companies that profit from human rights violations. There are already some initiatives in this respect, like the California Transparency in Supply Chains Act of 2010, which requires corporations to inform consumers whether the goods they purchase were made using slavery or human trafficking. As a matter of economic analysis, the possibility of being held liable under the ATS would require corporations to internalize the social cost of using forced or child labor, which would in some cases deter them from such heinous practices. Additionally, corporations that respect human rights would have one more incentive to keep doing so.
It remains to be seen whether any of these considerations will bear upon the Supreme Court’s analysis in Kiobel. Regardless, the Court’s decision (expected in June 2012) will likely determine whether U.S. courts will remain open to victims of overseas human rights violations aided and abetted by American corporations. At stake is a promising avenue for global human rights enforcement.
* New York University School of Law, L.L.M. Candidate, 2012
1 See 621 F.3d 111, 118–20 (2d Cir. 2010).
2 See Supreme Court Docket (Case 10-1491), http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/10-1491.htm.
3 See Matthew E. Danforth, Note, Corporate Civil Liability Under the Alien Tort Statute: Exploring Its Possibility and Jurisdictional Limitations, 44 Cornell Int’l L.J. 659, 661 (2011).
4 28 U.S.C. § 1350.
5 630 F.2d 876, 887–88 (2d Cir. 1980).
6 Sosa v. Alvarez-Machain, 542 U.S. 692, 725 (2004).
7 Id. at 732 n.20.
8 See Flomo v. Firestone Natural Rubber Co., 643 F.3d 1013, 1017–21 (7th Cir. 2011); Doe VIII v. Exxon Mobil Corp., 654 F.3d 11, 39–57 (D.C. Cir. 2011); Sarei v. Rio Tinto, 550 F.3d 822, 831 (9th Cir. 2008); Romero v. Drummond Co., 552 F.3d 1303, 1315 (11th Cir. 2008).
9 Flomo, 643 F.3d at 1017–21 (7th Cir. 2011).
10 Romero, 552 F. 3d at 1315 (11th Cir. 2008).
11 654 F.3d at 47.
12 621 F.3d at 118–20.
13 Id. at 123.
14 Id. at 148.
15 Id. at 149.
16 Khulumani v. Barclay Nat’l Bank Ltd., 504 F3d. 254, 277 (2d Cir. 2007) (emphasis added).
18 582 F.3d 244 (2d Cir. 2009).
19 Id. at 259.
21 Id. at 260–68.
22 654 F.3d at 14–19.
24 See 643 F.3d at 1020.
25 Id. at 1020–21.
26 See Aziz v. Alcolac, 658 F.3d 388 (4th Cir. 2011).
27 Id. at 400–01.
28 See Kiobel, 621 F.3d at 130.
29 See id. at 132–35.
30 Danforth, supra note 3, at 671.
31 See id.
32 See Kiobel, 621 F.3d at 168 (Leval, J., concurring in judgment).
33 See, e.g., José E. Alvarez, Are Corporations “Subjects” of International Law? (N.Y. Univ. Pub. Law & Legal Theory Working Papers, Paper No. 238, 2010), available at http://lsr.nellco.org/nyu_plltwp/238.
34 130 S. Ct. 876, 880 (2010).
35 See U.N. Human Rights Council, Protect, Respect, and Remedy: A Framework for Business and Human Rights: Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, John Ruggie, ¶¶ 17–26, U.N. Doc. A/HRC/8/5 (Apr. 7, 2008), available at http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G08/128/61/PDF/G0812861.pdf. See also Sarah Altschuller, Amy Lehr & Andrew Orsmond, Corporate Social Responsibility, International Legal Development in Review: 2010, 45 Int’l Lawyer 179, 179 (2011).
36 See U.N. Doc. A/HRC/8/5 ¶ 2.
37 Id. ¶ 3.