The remarkably short but controversial US Alien Tort Statute is forcing a much needed focus on corporate accountability for complicity in human rights crimes.
Resuscitated after lying dormant for nearly 200 years and at just 33 words long, the Alien Tort Statute (ATS) has long been a source of contention. Ever since it was first used as a way of pursuing damages against corporations that faced allegations of human rights abuses from foreign plaintiffs, US courts – and corporations – have tried to define the legislation’s terms and establish its limits.
As part of the Code of Laws of the United States that codifies US federal laws, the ATS says that “the 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.” While some lawyers say that the statute lacks specificity, others believe that its ambiguity is its key strength. “The ATS means an end to corporate impunity for brutal human rights abuses – and that’s exactly why corporations don’t like it,” says one lawyer.
The ATS is widely hailed as affording the best chance for plaintiffs anywhere in the world to bring a legal complaint against companies specifically for human rights abuses: most other developed countries only enable plaintiffs to bring cases for corporate negligence – for example, the UK has awarded damages to South African workers for asbestos exposure and mercury poisoning when their parent companies, Cape Plc and Thor Chemicals Holdings, were based in the UK.
Originally part of the 1789 Judiciary Act, for the first 200 years of its existence the ATS was essentially unused, providing jurisdiction in only one case. The ‘modern era’ of its use began in 1980 with Filartiga v Pena-Irala, when the Second Circuit Court of Appeal – one of 13 courts of appeal in the US – allowed two Paraguayan nationals to sue a former Paraguayan official for acts of torture and murder in violation of international law. This landmark decision has opened the door to more than 100 suits for human rights abuses over the last 30 years, committed by government officials and the foreign companies with operations there that aided and abetted them.
Virtually every major corporation doing business in politically unstable or conflicttorn regions has faced ATS litigation, the ‘granddaddy’ being a consolidated action brought in 2002 in the Southern District of New York against more than 50 US and foreign companies (with Ford, Daimler, General Motors and IBM as marquee defendants) that did business in South Africa during the apartheid period. The case is still pending on appeal.
While no ATS suit has resulted in a monetary judgment against a major multinational corporation, several large companies have reached settlements. In the case of Doe v Unocal that began in 1997, Burmese villagers sued the California-based energy giant for its direct complicity in abuses committed by the notorious Burmese military, Unocal’s partner in a natural gas pipeline joint venture. In September 2002, a federal appeals court held that the plaintiffs had presented evidence that Unocal knowingly provided substantial assistance to the military in its commission of forced labour, murder and rape, while the military secured the project and built project infrastructure. Accordingly, the court held that Unocal could be held liable for aiding and abetting the military’s abuses. In March 2005, the company agreed to compensate the plaintiffs.
‘[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’
In 2007 the families of jailed Chinese dissidents accused Yahoo!, the global Internet company, of abetting the torture of prodemocracy activists by releasing data that allowed China’s Government to identify, arrest and imprison them. The company settled. Fruit company Chiquita was sued in 2007 after it admitted paying money to paramilitary groups in Colombia who were responsible for killing 173 people between 1975 and 2004. As part of a deal with prosecutors, the company pleaded guilty to one count of doing business with a terrorist organisation and agreed to pay a US$25m fine in exchange for an assurance that court documents would not reveal the identities of the group of senior executives who approved the illegal protection payments.
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But a recent decision might make it more difficult to bring some of these types of cases to court. On 17 September 2010 a two-judge majority of the Second Circuit Court of Appeal in the case of Kiobel v Royal Dutch Petroleum Co held that corporations cannot be found liable under the ATS.
The plaintiffs, who are residents of the Ogoni Region of Nigeria, filed a putative class action complaint in September 2002 against defendants Royal Dutch Petroleum Company and Shell Transport and Trading Company PLC through a subsidiary named Shell Petroleum Development Company of Nigeria. The complaint alleged that throughout 1993 and 1994, Nigerian military forces shot and killed Ogoni residents and attacked villages – beating, raping, and arresting residents and destroying or looting property – all with the defendants’ assistance. The plaintiffs alleged that the defendants provided transportation to Nigerian forces, allowed property of the Royal Dutch Company to be used as a staging ground for attacks, and provided food and pay for the soldiers involved in the attacks. The lower district court dismissed some – but not all – of the plaintiffs’ claims for lack of specificity. Both parties appealed that decision.
According to Severin Ian Wirz, an associate at law firm Hughes Hubbard & Reed, although corporate liability was not the main issue on appeal, the decision highlights some important issues: first, that the twojudge majority held that the ATS requires federal courts to look to international law to decide whether corporations are liable in civil law under the ATS; and secondly, that international law clearly indicates that corporations are not subject to liability.
‘One who earns profits by commercial exploitation of abuse of fundamental human rights can successfully shield those profits from victims' claims for compensation simply by taking the precaution of conducting the heinous operation in the corporate form.’
Judge Pierre Leval
Wirz says that the majority surveyed corporate liability under various international sources, including findings by the International Military Tribunal at Nuremberg, as well as the International Court of Justice, the signing of the Rome Statute, and various contemporary international war tribunals, such as those for Rwanda and the former Yugoslavia. The court found ‘no historical evidence of an existing or even nascent norm of customary international law imposing liability on corporations’. Concluding that not even a single case existed where a corporation was ever subject to any form of liability under international law, the majority reasoned that there could be no corporate liability under the ATS. As a result, says Wirz, ‘the majority concluded that the case lacked jurisdiction, and dismissed all plaintiffs’ claims’.
Recognising the potential impact of the decision of the majority, Judge Pierre Leval, concurring with the majority in judgment only, stated: ‘The majority opinion deals a substantial blow to international law and its undertaking to protect fundamental human rights. According to the rule my colleagues have created, one who earns profits by commercial exploitation of abuse of fundamental human rights can successfully shield those profits from victims’ claims for compensation simply by taking the precaution of conducting the heinous operation in the corporate form.’
In the months following the judgment, lawyers have tended to view the decision as an indication of how ATS cases are likely to proceed in future – that companies will escape legal and financial redress for their part in human rights violations. Richard Meeran, partner at law firm Leigh Day & Co, says that ‘if this ruling stands and is adopted by other US courts, it will be a severe blow to foreign plaintiffs seeking redress for human rights violations around the world. The ATS is the only law of its kind to allow plaintiffs to pursue allegations of human rights abuses against corporations’.
At the moment, this ruling only applies directly in the Second Circuit, which covers the states of New York, Connecticut and Vermont, but it contradicts earlier judgments. For example, another appeals court, the Eleventh Circuit, previously ruled that corporations could be sued under the ATS and its ruling applies in Florida, Georgia and Alabama. Everywhere else is still up for grabs. However, the danger, say lawyers, is that Kiobel will be influential to other courts.
And the Kiobel judgment has already been followed. The ruling was adopted a month later by an Indiana federal court in the Flomo v Firestone Natural Rubber Company case, which alleged that the company had used forced child labour on rubber plantations in Liberia. While the court agreed that corporations cannot be sued under the ATS, the judge disagreed with Kiobel in one respect, says Marco Simons, legal director at EarthRights International, a US-based environmental and human rights advocacy group: she said that the court does, in fact, have jurisdiction over an ATS case against a corporation.
‘If this ruling stands and is adopted by other US courts, it will be a severe blow... The ATS is the only law of its kind to allow plaintiffs to pursue allegations of human rights abuses against corporations’
Leigh Day & Co
‘This matters, because a court without jurisdiction usually must dismiss a case without deciding any other issues,’ says Simons. ‘In the Flomo decision, the judge stated that she would soon issue a subsequent decision that outlines additional reasons for dismissing the case – something she could not do if the court lacked jurisdiction,’ he says.
The Flomo and Kiebel decisions are not the only times that US courts have sought to limit the ATS. In 2001, Coca-Cola faced a lawsuit by the Colombian trade union Sinaltrainal (National Union of Food Workers) alleging it collaborated with Colombian paramilitary forces to commit murder and torture. The case against the company was thrown out by the Miami district court because the murder occurred outside the US and was thus considered too far removed (physically and causally) from the company’s Atlanta headquarters. However, the district court allowed the case to go forward against two Coca-Cola bottlers.
In 2004, the Supreme Court attempted to narrow the types of cases that could be brought under the statute. In Sosa v Alvarez-Machain, the Court dismissed an ATS suit for arbitrary detention filed by a Mexican national who had been abducted at the direction of the US Government and brought back to the US to face trial. In an opinion by Justice David Souter in which all nine justices concurred, the Court held that federal courts should exercise ‘great caution’ in allowing private plaintiffs to bring civil suits for violations of international law.
The Court also said that ATS suits should be limited to those violations of the law of nations recognised in 1789 – assaults against ambassadors, violations of safe conduct, and piracy – and a ‘modest number’ of other offences ‘on a norm of international character accepted by the civilised world’ and defined with a similar ‘specificity.’ In Justice Souter’s words, the door for recognition of new causes of action was ‘still ajar subject to vigilant door-keeping’ by federal judges.
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The Supreme Court has also emphasised that federal courts should consider other ‘limiting’ factors, including whether international law extends the scope of liability for a violation of a given norm to the perpetrator being sued; if the defendant is a private actor such as a corporation; whether the claimant had exhausted local remedies available in the country where the alleged violation had occurred; and whether the executive branch had expressed a view about the impact of the litigation on US foreign policy.
Furthermore, in the judgment on the Presbyterian Church of Sudan v Talisman Energy, Inc case – also issued by the Second Circuit in October 2009 – the court imposed a higher pleading standard, requiring that ‘the mens rea standard for aiding and abetting liability in ATS actions is purpose rather than knowledge alone’. In this case, which involved allegations against a Canadian oil company that it assisted the Sudanese government to forcibly move civilians residing near oil facilities, the court concluded that ‘plaintiffs have not established Talisman’s purposeful complicity in human rights abuses’. In reaching that conclusion, the Second Circuit stated that ‘the standard for imposing accessorial liability under the ATS must be drawn from international law; and that under international law a claimant must show that the defendant provided substantial assistance with the purpose of facilitating the alleged offenses’.
Simons at EarthRights International concedes that ‘there’s no escaping the fact that the Kiobel judgment is a terrible decision’. However, he believes that it shows that relying on the courts as the primary means of protecting rights is never a complete solution. ‘Sometimes the courts can help. Often, however, they are hostile. Beyond the US, we need to expand the scope of accountability for human rights abuses, both geographically and institutionally. If Shell were subject to a strong accountability regime in Nigeria – or even in England, or the Netherlands, where it is headquartered – it wouldn’t matter whether it could be sued in the US. Since only a handful of the world’s corporate actors can be sued in the US, the ATS was always only a start. Losing it would be a setback, but not one that couldn’t be offset by victories elsewhere.’
‘Virtually every major corporation doing business in politically unstable or conflict-torn regions has faced ATS litigation’
Other lawyers agree that while the Kiobel decision may make it harder to bring a case under the ATS, it is not impossible. Michael Lynch, litigation partner at law firm Kelley Drye & Warren, says that the Kiobel decision has left the door ajar on corporate liability. ‘The court explicitly qualified its opinion as not concluding that corporations were ‘immune’ from liability under the ATS,’ says Lynch. “The language of the court also suggests it took a more narrow approach – if and when something becomes a norm of customary international law, it conceivably could be the basis for liability under the ATS. What that means is if norms of customary international law evolve in such a way that corporate liability becomes acceptable under the ATS, the protections afforded corporations by Kiobel may be irrelevant.’
Wirz also believes that the judgment is not as wide-reaching as many seem to think. First, he says, the judgment only says that corporations are not valid defendants – it does not rule out individuals, such as company directors, being pursued under the ATS for corporate abuses committed abroad. Secondly, the judgment is limited to the Second Circuit Court of Appeal – other US federal courts of appeal can still interpret the ATS differently, which means foreign plaintiffs could still try to prosecute corporations in the US (and be successful) in the remaining 12 circuit courts. And thirdly, he says, no one is likely to appeal the decision, largely because the Supreme Court is regarded as more pro-corporation now than it has ever been in its history.
Last December, the New York Times ran an article that said that under the present Chief Supreme Court Justice John G Roberts Jnr (who has completed five terms), the Supreme Court has ruled for business interests 61 per cent of the time, compared with 46 per cent in the last five years of the court led by Chief Justice William H Rehnquist, who died in 2005, and 42 per cent by all courts since 1953.
‘I would doubt that anyone would attempt to take this case all the way to the Supreme Court, especially when the court is deemed to be increasingly corporation friendly,’ says Wirz. ‘Any decision taken would effectively become the law of the land, and I think that people would prefer to still leave the ATS ambiguous everywhere outside the Second Circuit Court of Appeal,’ he says.
Simons is unsure whether an appeal will go to the Supreme Court, or whether any subsequent rulings in other courts will add the clarity that human rights lawyers want to see in the ATS. As he says: ‘I’ve always thought that Congress should pass a one-sentence statute stating “unless otherwise expressly indicated, corporations and other legal persons are civilly liable to the same extent as natural persons”.’
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Alternative strategies to the ATS
As the door on corporate liability under the ATS may be closing, other avenues are being explored. Last November, an association representing Congolese citizens filed a class action in a Montreal court against Canadian company Anvil Mining Limited after a ‘flawed’ Congolese military tribunal acquitted all nine Congolese soldiers for war crimes and three expatriate former employees of Anvil for complicity in war crimes.
It is alleged that the company, by providing logistical assistance, played a role in human rights abuses, including the massacre by the Congolese military of more than 70 people in the Democratic Republic of Congo in 2004.
Patricia Feeney, executive director at Rights and Accountability in Development (RAID), a UK-based human rights and advocacy group, says that ‘we hope that this case will set a precedent and show corporations that they cannot escape human rights abuses that they have been complicit in’.
In Quebec, civil procedure allows a non-profit organisation to act as plaintiff in a class action, as long as one of the organisation’s members is a member of the class action. Over the last few years, Quebec courtrooms have been the venue for attempts – from both Canadians and people abroad – seeking justice for crimes committed abroad. The Congolese case is the latest example. There have also been cases against Iranian authorities, a Rwandan genocidaire, and a Canadian housing developer building settlements in Israel.
The Canadian Centre for International Justice, a charity that works for genocide victims, said there has been little success, so far, in attempts to hold accountable Canadian companies operating abroad. ‘Accountability measures for corporations operating overseas have not necessarily been strong,’ says Matt Eisenbrandt, legal coordinator for the centre.
But some lawyers are taking a more pragmatic approach. As ATS litigation becomes more difficult, some lawyers hint that the best tack to take might be to drop trying to claim against companies for human rights violations in US courts in favour of pursuing corporate negligence claims, either in the US, or in other jurisdictions such as the UK or Australia.
As one lawyer, who did not wish to be named, says: ‘I do not believe that plaintiffs will cease to attempt to pursue claims against corporations for human rights abuses because of the Kiobel judgment, nor do I regard taking action against companies for negligence as a secondary option, particularly if the damages awarded or agreed are of a similar amount. Victims want justice, and that is usually reflected in the level of damages awarded rather than prison sentences.’
Neil Hodge is a freelance journalist specialising in legal and business issues. He can be contacted at firstname.lastname@example.org.
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