Would the End of the Alien Tort Statute Mean an End to Corporate Liability for Human Rights Abuses?

by Foley Hoag LLP - Corporate Social Responsibility
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If the U.S. Supreme Court strikes down, or severely limits, the Alien Tort Statute (“ATS”), what are the implications for plaintiffs and defendants in cases involving violations of international human rights law? The crystal balls were out in Washington recently as scholars and practitioners alike continued to speculate about the future of the ATS following the Supreme Court’s order to rehear arguments in Kiobel v. Royal Dutch Petroleum

In Kiobel, the Supreme Court could hold that the ATS has no extraterritorial application, it could severely limit its application, or it could maintain the status quo. Many have wondered if a Supreme Court ruling against the extraterritorial application of the ATS would put an end to suits against corporations for human rights abuses committed outside of the United States, but the emerging consensus is that even without the ATS, potential plaintiffs will have the capacity to submit their claims to other local or international tribunals.

The most viable option for potential plaintiffs would be to pursue tort claims in local courts in the jurisdiction where the alleged torts occurred. The applicable local laws would dictate the nature and scope of these suits. If the local laws do not distinguish between natural and legal persons, it is possible that they would provide for corporate liability or individual corporate director liability for the acts of corporations. In addition, countries such as Germany, Sweden, and Mexico are willing to impose fines or sanctions on corporations for some international human rights violations, even if they are not willing to hold corporations, who are only “legal persons,” directly liable for criminal acts.

Second, these cases could end up in the jurisdiction where the potential defendants reside or conduct their primary business activities, or in locations exercising universal jurisdiction or applying common law principles to bring civil or criminal charges.  Plaintiffs have already brought such suits to varying levels of success.  For example, in Yao Essaie Motto and others v. Trafigura Ltd & Anor, a British subsidiary of a Dutch company faced charges in London, where its operations center was located, concerning the illegal disposal of hazardous waste in Ivory Coast by one of the parent company’s ships. The Trafigura case was settled shortly before oral argument at the High Court for around £28 million, but the underlying incident also set off civil and criminal litigation in other jurisdictions including Ivory Coast (where the alleged tort occurred) and the Netherlands (where the parent company was incorporated), where cases resulted in sentences for some individuals and total corporate and individual fines in excess of EUR 1 million.

Cases such as Trafigura demonstrate the willingness of some States to extend their jurisdictional reach in the context of human rights violations or other series crimes.  Even if the ATS option is lost, the international community has already been addressing these issues through new legislation and other measures. For example, with the Canadian Parliament’s adoption of Justice for Victims of Terrorism Act in March, Canada has joined those States permitting the use of their domestic courts to litigate violations of international human rights law, specifically in cases involving alleged acts of terrorism. This Act creates a cause of action for damages or losses related to terrorist acts even if they occur outside of Canada to non-Canadian citizens, subject to certain conditions. On the other side of the Atlantic, national courts within the European Union are already authorized to exercise jurisdiction over any defendant corporation that is an EU domiciliary, subject to certain conditions, even if the acts alleged at suit occurred elsewhere.

Given alternative court options emerging outside of the United States, even if the Supreme Court were to hold that the ATS no longer applies extraterritorially, corporations could still find themselves in lengthy litigations over alleged human rights abuses committed in third-countries. Ultimately, an end to the ATS is not necessarily an end to corporate liability.

 

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