Earlier this week, the Supreme Court of the United States issued their long-awaited opinion in the case of Kiobel v. Royal Dutch Petroleum brought under the U.S. Alien Tort Statute (‘ATS’). The Court’s nine justices unanimously dismissed the case, striking a decisive blow against Mrs Kiobel and her fellow Nigerian petitioners in their quest to hold Shell accountable in the U.S. courts for alleged complicity in human rights violations committed in the Niger delta two decades ago.
Reaction to the Supreme Court’s opinion has been predictably split. NGOs and victims groups have been joined by a New York Times editorial in proclaiming a ‘giant setback’ for victims that undermines a generation of human rights law. The organisation Human Rights First more dramatically suggested that ‘human rights abusers may be rejoicing’ at the outcome. Conversely, the business community has welcomed the decision as ensuring multinational corporations are no longer exposed to ‘frivolous and costly’ lawsuits filed by class action trial lawyers in the U.S.
The ATS litigation in the U.S. of the past three decades has centred upon the permission granted to non-Americans to sue for overseas torts ‘committed in violation of the law of nations or a treaty of the United States’ – the argument being that egregious human rights abuses contravene the modern-day understanding of the law of nations (what is now known as international law), and that the United States has an obligation to ensure that those who violate international norms are held to account, wherever the harm occurred. For the majority of the Justices in Kiobel, however, the problem with this interpretation of the ATS was that the text of the legislation contains no reference to where torts covered by the Act were to have been committed; specifically, that the ATS does not unambiguously extend the jurisdiction of U.S. courts to torts committed outside U.S. territory.
The Supreme Court’s opinion has not come as any real surprise. The majority of the Justices concluded that the ATS was no different to any other U.S. Act in that it was governed by the presumption against extra-territorial application. In other words, unless specifically worded to the contrary, U.S. legislation only applies to acts committed within U.S. territory.
It is scant consolation to Mrs Kiobel and her fellow petitioners that the Supreme Court’s reasoning in throwing out her claim potentially leaves the door fractionally ajar for future plaintiffs seeking to plead the ATS before U.S. courts.
Firstly, the conservative majority of the Justices appeared to concede that ATS claims may succeed where they ‘touch and concern the territory of the U.S.’ – although they stated that the claims must do so ‘with sufficient force to displace the presumption against extraterritorial application’ and that mere corporate presence in the U.S. would not suffice. Such ‘forceful claims’ might include ‘allegations of serious violations of international law principles protecting persons’ according to Justice Kennedy – but the detail of this was left undefined, as was exactly how close the connections to the U.S. must be before being entertained by future courts.
Secondly, Justices Alito and Thomas referred to the possibility that allegations of domestic conduct may support a claim under the ATS if they are ‘sufficient to violate an international law norm.’ Again, this was not further defined – could a U.S. company, for example, employing a private military and security company to protect installations overseas be liable for human rights violations committed by the PMSC where the company knew the PMSC they were hiring had a history of heavy-handedness?
Thirdly, the liberal minority of the Justices considered that the ATS could be used where the defendant’s conduct ‘substantially and adversely affects an important American national interest’ – including the interest in preventing the United States from becoming a safe harbour for a torturer ‘or other common enemy of mankind.’ Justice Breyer for the minority reasoned that torturers and perpetrators of genocide were the modern equivalent of pirates, piracy having been argued by the majority as being the only meaningful crime in the contemplation of Congress when using the term ‘the law of nations’ in the ATS. Pirates, torturers and génocidaires were all ‘common enemies of mankind’ and as such all nations had an equal interest in their apprehension and punishment. It followed, Justice Breyer said, that modern international jurisdictional norms should be applied to help determine the scope of the ATS – with limitations such as exhaustion of local remedies, forum non conveniens and comity.
However, even the minority Justices reasoned that something more than mere corporate presence in the U.S., especially of a ‘minimal and indirect’ nature, was required for a claim to be sustained for acts committed by that company in another jurisdiction. The minority ruling was also surprisingly dismissive of the plaintiffs’ claim insofar as it alleged the defendants’ conduct did not amount to direct acts of torture, genocide or the equivalent but rather to acts of assistance for those who physically perpetrated the crimes. There is scope to speculate that even the minority would have ruled against the plaintiffs because the corporate defendants were allegedly indirect not direct perpetrators. Although this point is for the moment academic, it is worth mentioning that such an interpretation would be in conflict with virtually the entire jurisprudence of the international criminal tribunals.
Where does this leave the development of corporate accountability for alleged human rights abuses? It was perhaps a good thing for American victims that the Supreme Court did not address the issue of whether the Second Circuit Court of Appeals had been correct in holding that international law does not recognise corporate liability, notwithstanding the fact that such a ruling appears to fly in the face of both modern legal thought and, increasingly, practice. But whichever view one takes of the ruling, perhaps it is time, paraphrasing the penultimate line from Chief Justice Roberts’s opinion, to pass a more specific statute for U.S. courts to systematically extend their jurisdiction to acts committed overseas in violation of international norms. It may also be time to abandon reliance on legislation that dates back to the French Revolution. Over the last 224 years there have been so many developments in law and global trade that the international legal and commercial landscape of the twenty-first century is unrecognisable from the early years of the American Republic. However, it has only recently been recognised that powerful commercial entities have responsibilities towards those whose lives they affect. It is not surprising that there will be conflicting opinions in different jurisdictions until the law becomes more settled.
What the Kiobel ruling does not do is to de-rail the entire business and human rights movement. The creation and development of universal standards of corporate conduct is here to stay, through initiatives such as the United Nations Guiding Principles on Human Rights, the OECD’s Due Diligence Guidance For Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, the Conflict-Free Smelter Program, the Voluntary Principles on Security and Human Rights, the United Nations Global Compact – not forgetting section 1502 of the United States’ own Dodd-Frank Act and associated SEC Rules on Disclosing the Use of Conflict Minerals.
On the contrary, victim groups and NGOs are likely to re-double their efforts in seeking to hold businesses accountable. Within the U.S., class action trial lawyers will continue to push cases of alleged corporate complicity in human rights violations overseas. The Supreme Court’s opinion has narrowed but also focused the requirements for any successful claim for extra-territorial torts. As Paul Hoffman, the lawyer on the losing side in Kiobel put it, ‘there are going to be categories of cases that have sufficient U.S. connections to survive [the] ruling’ – particularly ones involving U.S. corporations.
Other victims will undoubtedly be dissuaded from launching an action in the U.S. courts, but they will look to other jurisdictions for satisfaction. The courts of certain European countries – such as the U.K., France and the Netherlands – may be more receptive to hearing claims of corporate complicity in extra-territorial human rights violations, as Global Diligence LLP has discussed in an earlier post. There may also be further pressure on the International Criminal Court to hold senior company executives accountable for complicity in international crimes where there is credible evidence to do so (again, see an earlier Global Diligence LLP post for Prosecutor Bensouda’s comments on this), although extending the jurisdiction of the ICC to legal as well as natural persons does not appear likely in the immediate future.
Although the Supreme Court’s opinion will be deeply disappointing to Mrs Kiobel and her fellow petitioners, Shell itself was careful not to sound triumphant at their victory. They know that corporate conduct will continue to be subjected to increasing scrutiny around the world as universal standards crystallise.
It might now be more difficult (though not impossible) for plaintiffs to bring cases against multinational companies in U.S. courts under the ATS, but the global trend towards greater corporate responsibility cannot be reversed. Companies about to invest in Burma-Myanmar will do well to take note – even those businesses with connections to the United States of America.
[Posted by Alex Batesmith, partner, Global Diligence LLP]