U.S. Top Court will Decide Right to Sue Extraterritorial Corporations
On October 17, 2011, the United States Supreme Court agreed to consider whether the country’s Alien Torts Statute (ATS) applies to corporations. The appeal arises in the case of Nigerian residents who claim that Dutch, British, and Nigerian corporations aided and abetted the Nigerian government during the 1990s in committing violations of customary international law, including forced exile, torture and extra-judicial killings.
Though the alleged conduct occurred in Nigeria, the plaintiffs have sought recourse via the unique jurisdiction given by the ATS to United States district court judges 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.” In other words, the ATS allows district courts to preside over suits brought in respect of conduct committed outside the United States.
Though it dates back to 1789, the ATS was a largely forgotten statute until victims of torture and other human rights abuses in foreign jurisdictions began bringing suits pursuant to the act in the 1980s. The import of these cases was to define the scope of the ATS to claims for violations of international norms that are as “specific, universal, and obligatory”.
The ATS has since mostly been used to bring claims against foreign individuals. Claims against corporations have for the most part resulted in settlement. Others have been denied on other issues. In Presbyterian Church Of Sudan v. Talisman Energy, Inc., the United States Court of Appeals for the second circuit accepted the possibility of the ATS applying to corporations but dismissed the claim because the relevant corporation did not act with the “purpose” of aiding and abetting human rights violations.
Kiobel v. Royal Dutch Petroleum looks to provide an opportunity for the top court in the United States to determine whether the ATS has any application at all to corporate entities. At first instance, the United States District Court for the Southern District of New York, dismissed claims against corporate defendants in part, and certified the entire order for interlocutory appeal.
In a 2-1 decision, the United States Court of Appeals for the second circuit held that the ATS did not apply to corporations since they are not subject to liability under customary international law. The majority held that since no corporation has ever been subject to any form of liability under the customary international law of human rights, the ATS does not confer jurisdiction over suits against corporations.
The decision of the United States Supreme Court could have significant ramifications for Canadian corporations. Many Canadian corporations, in particular those in the mining and energy sectors, operate in countries known for human rights abuses. If the Supreme Court reverses and accepts the applicability of the ATS to corporations, more Canadian companies could find themselves as ATS defendants.
Kiobel v. Royal Dutch Petroleum
U.S. Supreme Court Docket Number: 10-1491
No hearing date has been scheduled yet.
Alien Torts Statute foreign jurisdictions U.S. Supreme Court victims of torture