Supreme Court Holds That Foreign Companies Cannot Be Sued Under Alien Tort Statute

The Supreme Court of the United States has held in a recent decision that foreign corporations that have committed human rights violations outside of the territory of the United States may not be sued in the United States federal courts under the Alien Tort Statute, 28 U.S.C. §1350. In Jesner v. Arab Bank, PLC, 138 S.Ct. 1386 (2018), the plaintiffs (and the persons on whose behalf the plaintiffs advanced claims) were foreign nationals who were allegedly injured or killed by terrorist attacks in Israel and Palestine. Plaintiffs claimed that Jordan-based Arab Bank, PLC was partly liable for those injuries and deaths because individuals and organizations that supported and funded Hamas and other alleged terrorist organizations had accounts with Arab Bank that were used to pay the families of suicide bombers. Id. at 1394.

The Alien Tort Statue, enacted in the early days of the United States as part of the Judiciary Act of 1789, provides: “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.” 28 U.S.C. §1350. The Alien Tort Statute was hardly invoked for nearly two hundred years after its enactment. However, in 1980, the United States Court of Appeals for the Second Circuit held that claims under the Alien Tort Statute could be pursued on behalf of a man who had been tortured and murdered by Paraguayan police officers in Paraguay against a police officer who had moved to New York. Filartiga v. Pena-Irala, 630 F.2d 876 (1980).

In Jesner, the plaintiffs attempted to extend use of the Alien Tort Statute to hold corporations accountable for human rights violations committed by a corporation’s employees, asserting that “liability for corporations is well established as a matter of international law,” and thus, that Arab Bank could be held liable under the Alien Tort Statute. 138 S.Ct. at 1401. The Court acknowledged that in the American legal system, corporations are often subject to liability for the conduct of their human employees, but rejected the argument that there was any such international norm, finding that “even assuming” the few cases cited by plaintiffs from other nations “are relevant examples, at most they demonstrate that corporate liability might be permissible under international law in some circumstances. That falls far short of establishing a specific, universal, and obligatory norm of corporate liability.” 1401-02.

Further, the Court found that “the separation-of-powers concerns that counsel against courts creating private rights of action apply with particular force in the context of the ATS,” because “[t]he political branches, not the Judiciary, have the responsibility and institutional capacity to weigh foreign-policy concerns.” Id. at 1403. In addition, the Court highlighted a concern that allowing plaintiffs to sue foreign corporations pursuant to the Alien Tort Statute would set a precedent that could subject American corporations to similar lawsuits in foreign countries, and potentially decrease American corporations from investing abroad. Id. at 1405-06.

Therefore, the Court held that a foreign corporation that has committed human rights violations outside of the United States cannot be sued under the Alien Tort Statute, and noted that issue of whether any remedy should be available against foreign corporations for such alleged violations should be left to the discretion of Congress to potentially enact a new statutory scheme. Id. at 1407-08.

Fitch Law Partners will continue to monitor developments in this area of the law. For more information on Fitch Law Partners’ international litigation practice, please visit our website.


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