The Alien Tort Statute and Corporate Liability in the Age of International Terrorism

This article analyzes and comments on the Supreme Court appeal in Jesner v. The Arab Bank, to be argued before the Court in October 2017. The Court will decide whether the Alien Tort Statute (ATS), 28 U.S.C. § 1350, embraces or forecloses corporate liability. The plaintiffs, foreign citizens who were injured in Israel during the Second Intifada, alleged that the defendant, the Arab Bank based in Jordan, provided financial services to Mideastern terrorists who engaged in the Second Intifada. The Bank argued, and the lower court agreed, that the ATS barred corporate liability for such a case. The Court will address the issue whether the ATS creates a federal common law right of action against corporations, or forecloses corporate liability? The Court’s consideration of Jesner will be decided in the context of the Court’s recent rulings in Kiobel v. Royal Dutch Petroleum Co. In 2010 the Second Circuit decided Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010). Based on its interpretation of footnote 20 in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the court held that the ATS does not recognize corporate liability. In a concurring opinion, Judge Pierre Leval suggested that the issue of corporate liability is left to the domestic law of individual nation-states. Corporate liability is a staple of U.S. remedial law. In 2013, the Supreme Court granted certiorari to determine whether the ATS recognized corporate liability. After supplemental briefing, the Court unanimously decided Kiobel on grounds relating to the extraterritorial reach of the ATS, leaving the issue of corporate liability open. 133 S. Ct. 1659 (2013). The Court held that the presumption against extraterritoriality applied to claims under the ATS and neither the statute’s text, history, nor purposes rebutted that presumption. Thus, nothing in the ATS text evinced a clear indication of extraterritorial reach. Moreover, the historical background against which Congress enacted the ATS did not overcome the presumption. This historical background illustrated that the ATS was enacted to apply to three principle offenses against the law of nations: violations of safe conduct; infringements of the rights of ambassadors; and piracy. However, the Court’s reasoning and concurring opinions suggested that the ATS might allow for corporate liability. Subsequently, the Bank moved to dismiss the plaintiffs’ ATS claims based on the Second Circuit’s prior determination that the ATS barred corporate liability, arguing this holding was binding precedent that had not been overruled by the Supreme Court. The Second Circuit affirmed dismissal. The Second Circuit denied rehearing en banc in an 8 – 5 vote, which generated an array of opinions. Some panel judges defended the prior circuit holding. One dissenting judge suggested that the original panel’s holding was “almost certainly incorrect,” while two other panel judges suggested that the need to bring the Second Circuit into line with other appellate courts that had decided the ATS embraced corporate liability. Finally, another panel judge indicated that the Supreme Court was the best way to settle the issue of corporate liability under the ATS. Jesner is an important appeal precisely because the actions of multinational corporations are pervasive on the global stage, and punctuated by egregious eruptions of human rights violations. In its most elemental distillation, the Sosa-Kiobel-Jesner case-line pits human rights advocates (the presumptive good guys) against multinational corporations (the presumptive bad guys). As such, the essential nature of the problem invites resolution along the Court’s liberal and conservative divide. The original Kiobel appeal, which first raised the ATS corporate liability question, incited the passions of the human rights community as well as the hackles of the worldwide business community. Kiobel alerted the corporate community to the threat of being sued in American courts for corporate actions abroad. In Kiobel round one, the Court was inundated with numerous amicus briefs counselling the Court with regard to the corporate liability question. The business community takes solace in the Court’s prior unanimous decision in Mohamad v. Palestinian Authority, 566 U.S. 449 (2012), which definitively foreclosed corporate liability under the Torture Victims Protection Act. The business community also takes comfort in Sosa’s ambiguous footnote 20, which has dogged lower court consideration of ATS litigation and provides an argumentative platform for precluding corporate liability. At a minimum, the Court should provide some clarity to footnote 20, to lay that quandary to rest. The Court will now have to evaluate the ATS as against the TVPA, and sort out the corporate liability question which it decided differently in Mohamad. It remains to be seen whether the Court will default to its earlier Kiobel statement, that if Congress wants to impose corporate liability, it needs to amend the statute or draft one that explicitly provides for such liability. The high stakes involved in the Court’s resolution of the corporate liability question is evidenced again by the array of amicus briefs filed on behalf of the parties in Jesner. In a “usual suspects” fashion, an array of liberal organizations, constitutional, admiralty, comparative, and international law professors, historians, and at least one foreign ambassador, have weighed in support of the plaintiffs. On behalf of the Bank, a line-up of business concerns have filed briefs to stave off corporate liability under the ATS. It should be noted, however, somewhat unusually, the United States, the U.S. Chamber of Commerce, and the Center for Constitutional Rights and International Federation for Human Rights have filed amicus briefs supporting neither party. Finally, for those Court watchers who enjoyed the extensive briefing and arguments on the history of piracy (and the so-called General Bradford memorandum) in Kiobel, you may be delighted to learn that we may have another go-round of piracy-related arguments.