The US Supreme Court granted certiorari on October 2011 to hear Kiobel v. Royal Dutch Petroleum Co. and determine whether corporations can be held liable under the Alien Tort Statute (ATS). In February 2012, the Supreme Court heard oral arguments and began deliberating on this issue. The Court is poised to determine whether the jurisdiction granted by the ATS extends to civil actions brought against corporations under the law of nations.
The ATS was drafted as part of the Judiciary Act of 1789 to provide jurisdiction over civil claims brought by aliens for violations of international law. The ATS states: "[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." This statute provides US courts with jurisdiction to hear tort actions filed by aliens for either violations of a US treaty or a violation of customary international law. Since the ATS does not specify which offenses give rise to a cause of action under the statue, for a tort to be included under the ATS, it must be a violation of a well-established principle of international law [PDF]. Because the ATS is focused on the nature of the offense, rather than the perpetrator, it follows that corporations can and should be held liable for torts committed in violation of the law of nations. This is exemplified by existing case law on the ATS, such as the inclusion of piracy and liability for pirates under the statute. Although pirates are non-state actors, torts committed by pirates have fallen under the ATS based on the categorization of piracy as a crime against humanity, thus giving rise to universal jurisdiction. In addition to piracy, focusing on the nature of the offense rather than the perpetrator was also present in the aftermath of World War II when German corporations were held liable for Nazi activity. Corporate liability for offenses falling under universal jurisdiction was further evidenced by the Nuremburg trials. Since non-state actors have already been held liable for crimes falling under universal jurisdiction and the ATS does not state any exception for corporations, the Supreme Court should follow the history and purpose of the ATS, as well as existing case law, and hold Dutch Petroleum liable for the offenses alleged in Kiobel.
US courts have published only nine significant decisions on the ATS since 1980, and the Supreme Court in its entire history has decided only one ATS case with a second case now on the Court's docket. Keeping in mind the factors that originally influenced Congress to include crimes under the ATS, violations of the law of nations generally include war crimes and crimes against humanity crimes in which the perpetrator can be called hostis humani generis, or, "an enemy of all mankind." The evolution of the ATS through the courts began in 1980 when, after nearly 200 years of laying dormant, the court recognized that the ATS provides jurisdiction for US courts to adjudicate claims under the statute.
Congress does not directly address private actions under the ATS; decisions on this issue have been based on international and domestic treatment of non-natural persons under the law. One concern is that corporations will be reluctant to expand their business operations into countries that have poor human rights records, fearing that the corporations could be held liable for aiding and abetting oppressive governments in human rights violations. Although common among those opposing corporate liability under the ATS, these fears gloss over the safeguards in place to shield corporations who are not actively violating international law. Corporations will only be held liable for purposefully aiding and abetting violations of the law of nations. Therefore, even if a corporation knowingly does business that is arguably "aiding and abetting" state actors that violate international law, that corporation cannot be held liable if their actions are not purposeful. This distinction between "purposeful actions" versus "mere knowledge" shields corporations from liability unless their actions are purposefully aiding and abetting perpetrators of international law violations. Furthermore, failing to include corporate liability under the auspices of the ATS means that victims may not be compensated for the gravest of offenses (e.g. genocide, torture, slavery, etc.) simply because the perpetrators of such offenses are non-natural persons. The Court would incentivize human rights perpetrators to incorporate before carrying out crimes against the law of nations to escape liability.
During oral arguments before the Supreme Court the plaintiff's attorney pointed out [PDF] that the ATS identifies who the plaintiff must be (an alien) but does not identify who the defendant may be. Justice Elena Kagan stated that the question of corporate responsibility for a tort "seems to be a question of enforcement, of remedy; not of substantive international law." Thus, the method for bringing a claim against a defendant under the ATS would be determined by federal common law in the US, rather than international law. International law takes no official position on corporate liability but leaves the question up to the determination of individual states. Even if international law were applied as controlling, there is substantial evidence of corporate liability under international law. In fact, there is evidence of other countries holding corporations both criminally and civilly liable. In oral arguments, Justice Ruth Bader Ginsburg pointed out that the law of the place where corporations are headquartered typically has respondeat superior liability which holds corporations liable for the actions of their agents. The petitioner's lawyer further reasoned that the UK and the Netherlands have passed legislation imposing criminal liability on corporation for genocide, crimes against humanity and war crimes. The respondent's lawyer concedes "the ATS allows a civil remedy where the world would impose only criminal liability." This undermines the crux of the majority's argument that corporate liability is not an established principle of international law.
Therefore, even if the Court decided that the type of defendant that could be prosecuted under the ATS is a question of international law, customary international law today demonstrates acceptance of corporate liability for violations of the law of nations. This view is supported by the Nuremberg trials holding German corporations liable for Nazi activity during the Holocaust. The Kiobel majority's view that corporations are not liable under international law is refuted by the I.G. Farben case [PDF] during the Nuremberg trials, which held that under international law, corporations are liable for committing violations of international law. In addition to German companies facing liability during the Nuremberg trials, the court in Boimah Flomo pointed to the use of in rem judgments against pirate ships to further support the precedent on holding non-natural persons liable for violations of the law of nations. The US Court of Appeals for the Eleventh Circuit and various other case precedents on the ATS have been in line with US law categorizing corporations as legal persons, as exemplified by recent Supreme Court decisions such as Citizens United.
There is nothing in the text, history or purpose of the ATS that precludes corporations from liability for violations of the law of nations. The precedent set by other circuit courts (such as Sinaltrainal v. Coca-Cola Co., Doe VII v. Exxon Mobil Corporation and Aldana v. Del Monte Fresh Produce) holding that corporations can be held liable under the ATS further supports the principle of corporate liability in international law. By holding corporations liable for violations of the law of nations, the Court would also be acting in accordance with the history and purpose of the ATS. The ATS was passed by Congress to ensure that perpetrators of the gravest human rights violations, including torture, slavery and genocide, would have to compensate victims for the injuries they suffered. By carving out a separate exception, and immunizing corporations from liability under the ATS, the Supreme Court would frustrate the purpose of the ATS. Even worse, the Court would encourage perpetrators of the gravest human rights violations to simply incorporate in order to escape liability. Therefore, the Supreme Court should recognize corporate liability under the ATS, and adhere to the history and purpose of the ATS.
Sarah Posner is a notes and comments editor for the University of Pittsburgh Journal of Law and Commerce. Currently, Posner is a certified legal intern with the City of Pittsburgh Department of Law.
The opinions expressed herein are solely those of the author and do not necessarily represent those of JURIST or any other organization.
Suggested citation: Sarah Posner, Closing the Loophole on Corporate Liability and the ATS , JURIST - Dateline, Mar. 7, 2013, http://jurist.org/dateline/2012/3/sarah-posner-corporate-liability.php
This article was prepared for publication by Fangxing Li, an assistant editor for JURIST's student commentary service. Please direct any questions or comments to him at firstname.lastname@example.org