Supreme Court forms its opinion on Kiobel and corporate “modern pirates”

Supreme Court forms its opinion on Kiobel and corporate “modern pirates”

After yesterday’s re-argument of Kiobel v. Royal Dutch Petroleum, it looks like the US Supreme Court might keep the door ajar for non-US claimants to sue non-US corporations in US federal courts for torts committed abroad. The forthcoming judgement of the Supreme Court will show the way for many transnational human rights lawsuits against corporations before US courts, including litigation against German and European corporations.

The jurisdictional Alien Tort Claims Act of 1789 was originally aimed at giving US courts universal jurisdiction over piracy, but it is now common ground that it applies in modern times to several further torts with international-law implications. The questions to decide are whether it applies to torts committed extraterritorially (i.e. not on the high seas but on foreign territory) and whether the Act also intends to provide for jurisdiction against corporations, not just natural persons.

Even though the Alien Tort Claims Act of 1789 is a globally-unique statute, the judges are pointing out that the principle of universal jurisdiction is nowadays increasingly accepted, internationally. This may be most apparent in criminal law. But as some court briefs have pointed out, punitive-damages litigation before US courts is functionally somewhat comparable to (universal) criminal prosecution in other legal systems. The Court was not impressed when Counsel Sullivan on behalf of the corporate defendants attempted to mention differences between litigation and prosecution (“And there is a difference, Justice Breyer, between criminal and civil –“). Justice Breyer cut her off right there (“Okay. You’re right about that.”) and moved on.

The other issue relates to the “violation of the law of nations” as a requirement for jurisdiction under the Alien Tort Claims Act. Whether corporations can violate international law like the 18th-century prohibition of piracy was already discussed in the first hearing in February. Justice Breyer had then asked (rhetorically?) whether pirate Blackbeard could have avoided lawsuits in the US by founding Blackbeard, Inc. The judges mentioned that company laws everywhere attribute the conduct and knowledge of certain individuals to the corporations they work for, and that the wording of the Alien Tort Claims Act is not restricted to natural persons, state agents or any other quality of persons.

In yesterday’s hearing, the Court seemed ready to accept jurisdiction against corporations for acts on foreign territory based on the ATCA. It is inclined to preserve the limitations established in its Sosa judgment (universal, specific, binding norms). But it is also in search of some restriction in order to accommodate concerns about US foreign policy interests.

Up as a possible additional restrictor is, firstly, a nexus test. The mention was of an act nexus, actor nexus, or effect nexus. Presence of the corporation in the US might play a role. Even though Kiobel’s counsel Hoffman did not suggest the defendant corporation’s presence in the US as a connection (p. 4), the idea seemed not too far-fetched to Justice Sotomayor (p. 49). Secondly, a potential forum of necessity or exhaustion of remedy restriction was discussed. Plaintiffs would need to show that it was futile to seek legal protection in the host state (perhaps also in the home state) of the corporation. Other tests seem less likely. In particular, Justice Scalia replied to US State Department’s General Verrilli that it was problematic to let the judiciary figure out, case by case, a balance of foreign policy interests or listen to the State Department’s opinion in each case.

The minutes of the oral argument are available as pdf.