U.S. Supreme Court Curbs Extraterritorial Reach of the Alien Tort Statute

by Dechert LLP
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Last week, the U.S. Supreme Court issued its decision in Kiobel v. Royal Dutch Petroleum Co., No. 10-1491 pertaining to the reach of the Alien Tort Statute (“ATS”). This decision states that the ATS does not apply to conduct entirely outside of the United States.1

The Kiobel case was brought by a group of Nigerian nationals residing in the United States against certain Dutch, British, and Nigerian corporations alleged to have assisted the Nigerian government in committing atrocities against Nigerian citizens who protested against the companies’ oil exploration and development. The plaintiffs filed suit in the United States against the foreign oil companies alleging jurisdiction under the ATS, which provides that “[t]he 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 district court dismissed certain claims on the basis that they did not give rise to a violation of the law of nations. The Second Circuit subsequently dismissed the entire complaint based on the determination that the law of nations does not recognize corporate liability, the issue on which the Supreme Court initially granted certiorari. After oral argument last Term, however, the Supreme Court asked the parties to submit supplemental briefing on an additional question: “whether and under what circumstances courts may recognize a cause of action under the Alien Tort Statute, for violations of the law of nations occurring within the territory of a sovereign other than the United States.”

After a second oral argument, the Supreme Court affirmed the Second Circuit’s dismissal of the case and held that the ATS does not grant U.S. courts jurisdiction over actions occurring abroad. Based on the history of the ATS, Chief Justice Roberts writing for the Court in an opinion joined by Justices Scalia, Kennedy, Thomas, and Alito, held that the presumption against extraterritoriality (i.e., application of a statute outside of the U.S.) applied to claims under the ATS and concluded that “petitioners’ case seeking relief for violations of the law of nations occurring outside of the United States is barred.” Kiobel, Slip. Op. at 14. The Court noted that “all of the relevant conduct took place outside of the United States” and found that the plaintiffs could not rely on the ATS to confer jurisdiction on U.S. courts.2 Id.

This decision is important for non-U.S. companies facing claims for alleged conduct that occurred outside of the United States. Going forward, U.S. courts will no longer have jurisdiction over such cases under the ATS, and plaintiffs wishing to sue foreign entities in the United States will be required to establish jurisdiction based on conduct within the United States. The Court did not fully explain, however, the standard for what domestic conduct the ATS would encompass, stating that “even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application...Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices. If Congress were to determine otherwise, a statute more specific than the ATS would be required.” Id. Thus, the standard for such a showing will likely be the subject of further litigation.3

Footnotes

1 In December 2012, we published a Legal Update titled “U.S. Lawsuits Against Non-U.S. Banks; Recent and Expected Changes,” which addressed the issue of the U.S. Supreme Court's consideration of the reach of the ATS.

2 Justice Kennedy issued a one-paragraph concurrence noting the possibility that there may be cases in the future involving conduct not governed by the Court’s decision. Justice Alito (joined by Justice Thomas) also submitted a short concurrence stating that the ATS should not apply “unless the domestic conduct is sufficient to violate an international law norm that satisfies Sosa’s requirements of definiteness and acceptance among civilized nations.” Finally, although the decision was unanimous, Justice Breyer (joined by Justices Ginsberg, Sotomayor, and Kagan) submitted a separate concurrence arguing that the Court’s application of the presumption against extraterritoriality went too far and that the ATS should confer jurisdiction 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 American national interest.”

3 Just days after issuing its decision in Kiobel, the Supreme Court granted review of DaimlerChrysler AG v. Bauman, No. 11-965, which is expected to require further examination of the applicability of the ATS where a corporate defendant has limited contacts with the United States. In the DaimlerChrysler case, the defendant was sued in California for alleged human rights violations occurring in Argentina and its only connection with the United States was the existence of a subsidiary that sells automobiles in California. The district court dismissed for lack of jurisdiction, and the Ninth Circuit reversed. The decision in this case, which is expected early next year, may provide additional guidance on the nature and extent of U.S. contacts that would be sufficient to confer jurisdiction under the ATS.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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