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By Frank C. Razzano, Jeremy D. Frey, and John C. Snodgrass, Pepper Hamilton LLP
In Kiobel v. Royal Dutch Petroleum Co.,1 the U.S. Supreme Court held that the presumption against extraterritoriality applies to claims under the Alien Tort Statute (“ATS”).2 Consequently, there is no federal court jurisdiction under the ATS for torts in violation of the law of nations that occur in a foreign country. Kiobel signals a major retreat from the last 30 years of expansion of federal court jurisdiction to hear overseas human rights abuse cases.
The public response to Kiobel has been varied.3 Even though Kiobel was a 9-0 ruling, the New York Times opined that a cabal of the court's conservatives had dealt a major blow to global human rights.4 The U.S. Chamber of Commerce cheered the ruling essentially as tort reform.5 Still others have regarded it as a ruling against international forum shopping.6 Lower federal courts are undoubtedly relieved to hear that they will not have to write more lengthy discourses on the history of this ancient statute.7
Nearly a year before the question of the extraterritorial application of the ATS was first raised by the Supreme Court, the authors argued here that the ATS was not a grant of universal jurisdiction embracing wholly extraterritorial torts.8
Passed as part of the Judiciary Act of 1789, the ATS provides federal court jurisdiction for aliens’ tort claims involving violations of international law and treaties. While there has been much detailed historical scholarship regarding the origin of the ATS, suffice it to say that it was essentially a creature of the Marbois incident.
In 1784, French diplomat François Barbé-Marbois was assaulted in Philadelphia by another French citizen. The French Minister lodged a protest and the French threatened to leave Pennsylvania if full satisfaction were not accorded. But the demanded satisfaction was not available in any federal forum because the tort involved a foreign citizen.
The Marbois affair was a subject of comment at the Constitutional Convention by John Jay, who complained that the inability to provide any redress threatened the new nation’s conduct of foreign affairs. The Marbois incident’s publicity ultimately led to the enactment of the ATS in the 1789 Judiciary Act.
Until a landmark Second Circuit decision in 1980, the ATS had virtually been forgotten. In Filartiga v. Peña-Irala,9 the Second Circuit allowed a Paraguayan citizen to sue under the ATS for the alleged torture and murder in Paraguay of the plaintiff’s brother. The defendant, a Paraguayan police officer, had moved to New York, where the suit was brought.
Filartiga was a so-called “foreign cubed” case in that it involved a foreign tort and both a foreign defendant and a foreign plaintiff. It lacked any connection to the U.S. except that the defendant was found in New York.
In the years after Filartiga, the number of ATS suits exploded. These cases have included claims by foreign plaintiffs against banks and financial services businesses, the extractive industry, transportation and telecommunications businesses, and pharmaceutical companies, for allegedly aiding and abetting human rights abuses overseas. These cases have typically arisen from foreign armed conflicts, and have often involved corporate defendants’ international business operations and overseas development projects.
One notable case, Khulumani v. Barclay National Bank Ltd.,10 was a human rights case involving apartheid-era conditions in South African mines. The resulting U.S. judgment against the defendants famously brought condemnation from the South African government: then South African President Mbeki said, “We consider it completely unacceptable that matters that are central to the future of our country should be adjudicated in foreign courts which have no responsibility for the well-being of our country … .”11
The rapid growth of ATS cases in the decades after Filartiga required the lower federal courts to wrestle with difficult issues of statutory interpretation, such as who can be an ATS plaintiff, who can be sued under the ATS, and precisely what torts “in violation of the law of nations” are actionable under the ATS.
In 2004, the Supreme Court issued its ruling in Sosa v. Alvarez-Machain,12 which restricted the scope of international law violations that are actionable under the ATS.
Sosa involved allegations that the DEA had directed the kidnapping and transportation of the plaintiff from Mexico to the U.S. Rejecting plaintiff’s ATS claim, the court held that “federal courts should not recognize claims under federal common law for violations of any international law norm with less definite content and acceptance among civilized nations than the historical paradigms familiar when [the ATS] was enacted.”13
Kiobel, a “foreign cubed” case, involved allegations by Nigerian plaintiffs that certain non-U.S. corporations, including Royal Dutch Petroleum, had aided and abetted Nigerian government security forces in attacking and killing Nigerian civilians who were resisting the companies’ oil exploration.
After the dismissal of certain of the plaintiffs’ claims by the district court, the Second Circuit ruled sua sponte that the oil companies were not proper defendants for an ATS suit.
The Second Circuit concluded that corporate liability for international law torts “is not recognized as a ‘specific, universal and obligatory norm,’… [and therefore] not a rule of customary international law that we may apply under the ATS.”14 On this basis, the court concluded that corporations could not be liable under the ATS for torts in violation of the law of nations. This ruling was contrary to holdings in various other circuits.15
In its turn, the Supreme Court granted certiorari in Kiobel in October 2011 to resolve the Circuit split and to address the issue of corporate liability under the ATS. At oral argument in February 2012, however, it became clear that the justices had identified the “lurking” issue of extraterritoriality.
After the oral argument, the court ordered re-briefing and re-argument on the extraterritorial application of the ATS. That issue was re-argued to the court in October 2012.
In Kiobel, the majority found that there was nothing about the ATS that supported a conclusion that the First Congress intended to include torts committed in foreign lands. Noting the presumption against extraterritoriality,16 the court ruled that in the absence of any clear indication to the contrary, the ATS must be limited to domestic conduct.
The majority also briefly addressed the issue on which Filartiga based its result: that transitory tort jurisdiction was a feature of English common law that had been incorporated into the new nation’s jurisprudence at its founding.
The court said that “the question … is not whether a federal court has jurisdiction to entertain a cause of action provided … by international law. The question is instead whether the court has authority to recognize a cause of action under U.S. law to enforce a norm of international law.”17
Since the ATS did not have the requisite indicia of extraterritorial application, the transitory tort doctrine was inapplicable.
The majority also made clear its view of the perils of interpreting the ATS to assert universal tort jurisdiction. The court emphasized the risk that
other nations, also applying the law of nations, could hale our citizens into their courts for alleged violations of the law of nations occurring in the United States, or anywhere else in the world. The presumption against extraterritoriality guards against our courts triggering such serious foreign policy consequences … .18
The court’s majority was careful to anticipate future arguments that a tort is not extraterritorial if some aspect of the tort’s commission (such as its planning) is done here. Justices Alito and Thomas stated that “a cause of action falls outside the scope of the presumption [against extraterritoriality] … only if the event or relationship that was ‘the ‘focus’ of the congressional concern’ under the relevant statute takes place within the United States.”19
The majority held that the U.S. nexus must be of “sufficient force to displace the presumption against extraterritorial application.”20 This is vague, to be sure, but it provides fertile ground for dismissal of ATS cases where the U.S. nexus is lacking, such as where neither the tort’s commission nor the plaintiff’s injury occurs here.21
Justices Breyer, Ginsburg, Sotomayor, and Kagan all concurred in the result but did not agree with application of the presumption against extraterritoriality. For these justices, it seems that the essence of the ATS is about granting federal court jurisdiction to aliens for certain violations of the law of nations. They argued that jurisdiction under the ATS could be found where (1) the alleged tort occurs on American soil, (2) the defendant is an American national, or (3) the defendant’s conduct substantially and adversely affects an important U.S. interest, including preventing the United States from becoming “a safe harbor (free of civil as well as criminal liability) for a torturer or other common enemy of mankind.”22
In short, it appears that these justices would affirm the application of the ATS to a situation like that presented in Filartiga.
The 9-0 result in Kiobel is perhaps not so remarkable. The majority opinion arises from the current court’s keen sense of the limitations of judicial power and its role in foreign affairs.
Filartiga was decided at a time when shouldering responsibility for human rights abuses overseas seemed closer to the political mark. American exceptionalism in the human rights arena was all the rage. At the same time as Filartiga, for example, the U.S. decided not to participate in the Moscow summer Olympics in protest over the Soviet Union’s human rights record.
Then came cases like Khulumani and others, which resulted in potent objections by foreign governments to the projection of U.S. power and morality overseas through judicial fiat. Filartiga’s expansive (and expensive) approach of opening federal courts to the world’s human rights abuse claims now seems dubious, particularly in light of the current federal budget sequester. It is small wonder that this Supreme Court would be disinclined to read the ATS, one of the oldest and oddest of federal statutes,23 as a warrant for universal tort jurisdiction.
While the result in Kiobel may not be remarkable, the breadth of the court’s majority ruling is a surprise: the Department of Justice, for example, had urged the court to hold that an American corporation could be liable in tort for a violation of international law.
Many thought that the court might only rule out “foreign cubed” cases. It could have done this and still reached the same result. Few expected the majority’s near-categorical ruling that the ATS lacks extraterritorial effect.
On April 22, 2013, the Supreme Court granted cert. in another ATS case, Bauman v. DaimlerChrysler Corp.24 In that case, Daimler was sued in the U.S. under the ATS by Argentinian residents who alleged that Daimler’s Argentine subsidiary had collaborated with state security forces in Argentina to torture and kill individuals during Argentina’s “dirty war.”
The Ninth Circuit held that Daimler was subject to personal jurisdiction in California through the contacts of its subsidiary, and consequentially found that the district court’s exercise of personal jurisdiction was reasonable.
The Supreme Court is now poised to decide next term yet another case involving the ATS: this time, the focus is on the required U.S. nexus. The court may seize the opportunity to decide the broader issue of whether it violates due process for a court to exercise general personal jurisdiction over a foreign corporation based on the fact that an indirect corporate subsidiary does business here.
In any event, the court’s Kiobel ruling that foreign torts may not be reached under the ATS will likely return the ATS to the obscurity it had in the first 200 years of its history. Our national experiment with universal jurisdiction in the federal courts for international law torts seems to be at an end for now.
As construed in Kiobel, ATS jurisdiction is limited to cases brought by an alien for international law torts that occur in the United States (or perhaps on the high seas and not within the jurisdiction of another country). So it will be a rare case indeed in which a plaintiff will choose to resort to international law to try to secure federal court jurisdiction for a tort claim.
There are still many unanswered questions about the ATS after Kiobel. For example, we do not know who an “alien” is, whether a corporation is a proper ATS defendant, what is the required mental state for aiding and abetting ATS violations, or what international law torts are actionable under the ATS. It is also not clear when the U.S. nexus is sufficient that the tort may be said to have been committed here for ATS purposes.
One thing, however, seems certain: without congressional action that extends the ATS extraterritorially, the ATS is likely to be a rarely used vehicle for federal court jurisdiction in the future.
Frank C. Razzano, firstname.lastname@example.org, and Jeremy D. Frey, email@example.com, partners at Pepper Hamilton LLP, both are former assistant U.S. attorneys in the District of New Jersey. Razzano teaches international criminal law and other subjects at the University of Maryland School of Law. John C. Snodgrass, firstname.lastname@example.org, practices in the Securities and Commercial Litigation Group at Pepper Hamilton LLP.
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