SCOTUS Provides Sweeping Protection To Human Rights Violating Corporations

The U.S. Supreme Court has provided sweeping immunity from all Alien Tort Statute lawsuits for suits against corporations not incorporated in the United States, even when those suits involve conduct relevant to the lawsuit that take place in the United States, in the case of Jesner v. Arab Bank. As the official syllabus to the case explains:

Petitioners filed suits under the Alien Tort Statute (ATS), alleging that they, or the persons on whose behalf they assert claims, were injured or killed by terrorist acts committed abroad, and that those acts were in part caused or facilitated by respondent Arab Bank, PLC, a Jordanian financial institution with a branch in New York. They seek to impose liability on the bank for the conduct of its human agents, including high-ranking bank officials. They claim that the bank used its New York branch to clear dollar-denominated transactions that benefited terrorists through the Clearing House Interbank Payments System (CHIPS) and to launder money for a Texas-based charity allegedly affiliated with Hamas. While the litigation was pending, this Court held, in Kiobel v. Royal Dutch Petroleum Co., 569 U. S. 108, that the ATS does not extend to suits against foreign corporations when “all the relevant conduct took place outside the United States,” id., at 124, but it left unresolved the Second Circuit’s broader holding in its Kiobel decision: that foreign corporations may not be sued under the ATS. Deeming that broader holding binding precedent, the District Court dismissed petitioners’ ATS claims and the Second Circuit affirmed. Held: The judgment is affirmed.

The Court reasoned that the Alien Tort Statute was adopted in the very first days of the Republic because if it denied foreigners the right to sue domestic tortfeasors for torts, that the United States could have liability in lieu of the tortfeasor under international law, causing diplomatic problems for the United States. But, allowing a suit against a foreign corporation could cause diplomatic problems for the United States by aggravating the country where the foreign corporation is based, and therefore allowing such suits was inconsistent with the purpose of the statute.

The Court considered the claims to be primarily about terrorist acts committed abroad and found that the U.S. connection was too tangential to give rise to a U.S. lawsuit, despite the fact that the majority felt that this would be typical of such suits.

The ruling reflect a long term trend on the part of the conservative majority in the U.S. Supreme Court to disfavor tort liability, especially when it concerns human rights, and to narrow the jurisdiction of U.S. courts, particularly when international fact patterns are involved. The ATS, in particular, has long been a target of conservatives and some neo-liberals who don't think it is fruitful to have U.S. courts hold companies liable for human rights abuses abroad.

The 5-4 majority's opinion is officially summarized as follows:

The Judiciary Act of 1789 included what is now known as the ATS, which provides: “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.” 28 U. S. C. §1350. The ATS is “strictly jurisdictional” and does not by its own terms provide or delineate the definition of a cause of action for international-law violations. Sosa v. Alvarez-Machain, 542 U. S. 692, 713–714. It was enacted against the backdrop of the general common law, which in 1789 recognized a limited category of “torts in violation of the law of nations,” id., at 714; and one of its principal objectives was to avoid foreign entanglements by ensuring the availability of a federal forum where the failure to have one might cause another nation to hold the United States responsible for an injury to a foreign citizen, see id., at 715–719. 

The ATS was invoked but a few times over its first 190 years, but with the evolving recognition—e.g., in the Nuremberg trials—that certain crimes against humanity violate basic precepts of international law, courts began to give some redress for violations of clear and unambiguous international human-rights protections. After the Second Circuit first permitted plaintiffs to bring ATS actions based on modern human-rights laws, Congress enacted the Torture Victim Protection Act of 1991 (TVPA), creating an express cause of action for victims of torture and extrajudicial killing in violation of international law. ATS suits became more frequent; and modern ATS litigation has the potential to involve groups of foreign plaintiffs suing foreign corporations in the United States for alleged human-rights violations in other nations. 

In Sosa, the Court held that in certain narrow circumstances courts may recognize a common-law cause of action for claims based on the present-day law of nations, 542 U. S., at 732, but it explicitly held that ATS litigation implicates serious separation-of-powers and foreign-relations concerns, id., at 727–728. The Court subsequently held in Kiobel that “the presumption against extraterritoriality applies to [ATS] claims,” 569 U. S., at 124, and that even claims that “touch and concern the territory of the United States . . . must do so with sufficient force to displace” that presumption, id., at 124–125. Pp. 6–11. 

Sosa is consistent with this Court’s general reluctance to extend judicially created private rights of action. Recent precedents cast doubt on courts’ authority to extend or create private causes of action, even in the realm of domestic law, rather than leaving such decisions to the Legislature, which is better positioned “to consider if the public interest would be served by imposing a new substantive legal liability,” Ziglar v. Abbasi, 582 U. S. ___, ___ (internal quotation marks omitted). This caution extends to the question whether the courts should exercise the judicial authority to mandate a rule imposing liability upon artificial entities like corporations. Thus, in Correctional Services Corp. v. Malesko, 534 U. S. 61, 72, the Court concluded that Congress, not the courts, should decide whether corporate defendants could be held liable in actions under Bivens v. Six Unknown Fed. Narcotics Agents, 403 U. S. 388. 

Neither the language of the ATS nor precedent supports an exception to these general principles in this context. Separation-of-powers concerns that counsel against courts creating private rights of action apply with particular force in the context of the ATS, which implicates foreign-policy concerns that are the province of the political branches. And courts must exercise “great caution” before recognizing new forms of liability under the ATS. Sosa, supra, at 728. The question whether a proper application of Sosa would preclude courts from ever recognizing new ATS causes of action need not be decided here, for either way it would be inappropriate for courts to extend ATS liability to foreign corporations absent further action from Congress. Pp. 18–19. 

The ATS was intended to promote harmony in international relations by ensuring foreign plaintiffs a remedy for international-law violations when the absence of such a remedy might provoke foreign nations to hold the United States accountable. But here, and in similar cases, the opposite is occurring. Petitioners are foreign nationals seeking millions of dollars in damages from a major Jordanian financial institution for injuries suffered in attacks by foreign terrorists in the Middle East. The only alleged connections to the United States are the CHIPS transactions in Arab Bank’s New York branch and a brief allegation about a charity in Texas. At a minimum, the relatively minor connection between the terrorist attacks and the alleged conduct in the United States illustrates the perils of extending the scope of ATS liability to foreign multinational corporations like Arab Bank. For 13 years, this litigation has caused considerable diplomatic tensions with Jordan, a critical ally that considers the litigation an affront to its sovereignty. And this is not the first time that a foreign sovereign has raised objections to ATS litigation in this Court. See Sosa, supra, at 733, n. 21. 

These are the very foreign-relations tensions the First Congress sought to avoid. Nor are the courts well suited to make the required policy judgments implicated by foreign corporate liability. Like the presumption against extraterritoriality, judicial caution under Sosa “guards against our courts triggering . . . serious foreign policy consequences, and instead defers such decisions, quite appropriately, to the political branches.” Kiobel, supra, at 124. Accordingly, the Court holds that foreign corporations may not be defendants in suits brought under the ATS. Pp. 25–27.

The Court's four liberal justices open their dissenting opinion, written by Justice Sotomayor, with this paragraph:

The Court today holds that the Alien Tort Statute (ATS), 28 U. S. C. §1350, categorically forecloses foreign corporate liability. In so doing, it absolves corporations from responsibility under the ATS for conscience-shocking behavior. I disagree both with the Court’s conclusion and its analytic approach. The text, history, and purpose of the ATS, as well as the long and consistent history of corporate liability in tort, confirm that tort claims for law-of-nations violations may be brought against corporations under the ATS. Nothing about the corporate form in itself raises foreign-policy concerns that require the Court, as a matter of common-law discretion, to immunize all foreign corporations from liability under the ATS, regardless of the specific law-of-nations violations alleged. I respectfully dissent.