United States Supreme Court Holds that Foreign Corporations May Not Be Held Liable Under the Alien Tort Statute

by Sheppard Mullin Richter & Hampton LLP

Sheppard Mullin Richter & Hampton LLP

In Jesner v. Arab Bank, PLC, 584 U.S. ___, 2018 WL 1914663 (U.S. Apr. 24, 2018) (Kennedy, J.), the Supreme Court of the United States held that foreign corporations may not be sued under the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350. The Court, disagreeing with opinions from the Seventh, Ninth and District of Columbia Circuits (see blog articles here and here), concluded that United States courts do not have authority under the ATS to impose liability on foreign corporations for violations of international human rights laws where the law of nations does not impose such liability. This decision provides relief to foreign corporations that otherwise could have been held liable for committing violations of international law under the ATS, in the area of human rights and beyond.

About 6,000 plaintiffs filed five lawsuits between 2004 and 2010 in the United States District Court for the Eastern District of New York, claiming that they or their family members (predominantly foreign nationals) were injured or killed by terrorist attacks in the Middle East. They alleged that defendant Arab Bank, PLC conducted electronic transfers through its New York City office that funded these injurious terrorist operations — aid which is presumptively illegal under international law. The questions facing the Supreme Court revolved around the liability of corporations for human rights violations by their employees who provide such aid through the corporation.

The Supreme Court was first presented with this question in Kiobel v. Royal Dutch Petroleum Co, 569 U.S. 108 (2013). In that case, the Supreme Court declined to decide the narrow question of whether the ATS extended to suits against foreign corporations, and instead held on broad grounds that the ATS does not apply to conduct that is entirely foreign in nature. (See blog article here). The Court left open the issue of whether an ATS claim might appropriately be asserted against a corporation based upon acts occurring outside the United States, but in some way touching and concerning the United States.

The district court dismissed the Jesner plaintiffs’ claims based upon Kiobel. The United States Court of Appeals for the Second Circuit affirmed, applying the reasoning in its own decision in Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010), that, because international criminal tribunals typically limit their jurisdiction to natural persons, the ATS does not apply to violations of international law by corporations. (See blog article here).

In the plurality opinion written by Justice Kennedy, the Court held that there is no “specific, universal, and obligatory norm” in international law providing for corporate liability. Rather, the Court held that there is significant doubt as to whether prevailing international law imposes criminal liability on corporations and, in light of that doubt and the daunting foreign policy consequences (such as mounting tensions with the Hashemite Kingdom of Jordan over this very case), the decision to extend the application of the ATS to foreign corporations is the role of Congress and not the courts.

In concurring portions of the plurality opinion, Justices Kennedy and Thomas, joined by Chief Justice Roberts, note that limited application of the ATS to foreign corporations may likely be deemed favorable by Congress leading legislative action. Concurring with the opinion of the Court in full, Justice Thomas briefly highlighted and supported the views of his concurring colleagues. Justice Gorsuch wrote an opinion concurring in part and concurring in the judgment, urging that the Supreme Court should not be creating new causes of action under the ATS, and arguing more broadly that the ATS likely does not apply to suits between foreign plaintiffs and foreign defendants. Justice Alito penned his particular concerns where doing so may create just the “diplomatic strife” the ATS was intended to prevent.

In a dissenting opinion, Justices Sotomayor, Ginsburg, Breyer and Kagan expressed their view that the international treaty standard rendering the financing of terrorism a violation of international law, not the method of enforcing that standard, is the relevant “specific, universal, and obligatory norm” at issue. The dissenting Justices determined that this is not the proper inquiry at all, and instead believed that the Court should look at whether any reason exists to distinguish between natural persons and corporations under the ATS. Analogizing to pirate ships’ liability under the ATS centuries ago, the dissenting Justices interpreted the corporate form as not being inherently devoid of responsibility under international law, and observed that foreign policy concerns identified by the plurality could instead be addressed on extraterritoriality grounds.

The new precedent set by the Jesner plurality decision reflects this Court’s hesitation to engage in what it considers judicial overreach. It will therefore be up to Congress to decide whether to expand the ATS to allow victims to sue foreign corporations — often the only “deep pocket” for recovery in light of foreign sovereign immunity — in federal courts for their participation or assistance in violations of human rights.

Written by:

Sheppard Mullin Richter & Hampton LLP

Sheppard Mullin Richter & Hampton LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.