Corporate liability for aiding and abetting war crimes abroad?

Corporate Liability under the Alien Tort Statute and Kiobel II

As explained below, a recent decision highlighted by Lawfare prompted this particular post that touches on a subject I find intriguing: corporate liability under international law. We now have a Supreme Court decision (Kiobel II) that touches on the issue without deciding it, and two lower court decisions interpreting that Supreme Court decision, which are addressed here. The basic premise of this post is that both lower courts got it wrong insofar as they read more into Kiobel II than is actually there. Further, the Kiobel II decision actually shows that corporate liability under the ATS is still very open to question, and will likely result in a divided and contentious decision when the Supreme Court finally addresses it.

The basic issue is whether or not the jurisdiction granted to Federal courts under the Alien Tort Statute extends to civil actions against corporations such that corporations can be held liable for violations of international law. The ATS, 28 U.S.C. 1350, provides, in whole: "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."

There has been a push in the last 17 or so years especially to find such liability under the ATS. This push has given rise to claims ranging from trying to hold Exxon Mobile liable for human rights abuses committed in Indonesia by Indonesian military personnel hired by Exxon, to trying to hold Ford and IBM liable for aiding and abetting acts of the South African Apartheid regime by manufacturing military vehicles and computers for the same. These cases have given rise to a split in the courts. The Second Circuit has found no such corporate liability under the ATS, while others, such as the Seventh, Ninth and D.C. Circuit Courts have. The Second Circuit case, Kiobel v. Royal Dutch Petroleum Co., ("Kiobel I") found its way to the Supreme Court.

To be very brief: In Kiobel I, plaintiffs were a group of Nigerian nationals who alleged that various foreign (not incorporated in the U.S.) corporations had enlisted the help of the Nigerian government to violently quell demonstrations against the practices of those corporations and the environmental impact of the same. They brought an action to find those corporations liable for violations of international law under the ATS. The Second Circuit Court of Appeals held that the Nigerians' complaints had to be dismissed, because, in that courts view, the ATS does not confer jurisdiction over claims against corporations.

The Supreme Court granted certiori to consider the question of corporate liability under the ATS, and even heard oral arguments regarding the same. After those arguments, however, the Court then directed the parties to write supplemental briefs addressing a different question, "Whether and under what circumstances the ATS allows courts to recognize a cause of action for violations of the law of nations occurring within the territory of a sovereign other than the United States.”

The Court's decision, Kiobel II, upheld the decision in Kiobel I, but resolved the case completely on the answer to the above question, without explicitly giving a holding as to corporate liability under the ATS at all. The Court basically held that for the ATS to apply at all, the claims must "touch and concern the territory of the United States," with "sufficient force" to overcome application of the presumption that when a statute gives no clear indication of an extraterritorial application, it has none. In other words, the ATS doesn't make the United States the forum for enforcing private claims for acts that don't really have any relationship to the U.S.: the ATS doesn't allow aliens to sue alien corporations over acts that happened in another nation in United States Courts.

Kiobel II, however, closed with the following statement about overcoming that presumption: "Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices." Enter two lower court decisions, In Re: SouthAfrican Apartheid Litigation by a district court in the Second Circuit, and Doe I v. Nestle USA, Inc. by the Ninth Circuit Court of Appeals.

Both of these decisions relied on the above statement regarding corporations to construe Kiobel II as allowing for corporate liability under the ATS.

From the Ninth Circuit Appeals decision, citing Kiobel II

"In light of intervening developments in the law, we conclude that corporations can face liability for claims brought under the Alien Tort Statute [citation of Kiobel II] suggesting in dicta that corporations may be liable under ATS so long as presumption against extraterritorial application is overcome."

And, from the District Court opinion, again referencing Kiobel II:

"The opinions explicitly recognize that corporate presence alone is insufficient to overcome the presumption against extraterritoriality or to permit a court to exercise personal jurisdiction over a defendant in an ATS case, respectively. By necessity, that recognition implies that corporate presence plus additional factors can suffice under either holding."

But that recognition implies no such thing as recognizing corporate liability under the ATS. Both decisions attempt to construe the Supreme Court's lack of holding regarding corporate liability as a holding actually allowing corporate liability. But that is exactly what the dicta in Kiobel II did not do. Instead, the decision set up a threshold which insured that the Court didn't have to address that question at all.

The Supreme Court was looking at the presumption of "extraterritorial application" as a threshold issue in a case that dealt completely with alien parties litigating liability for acts that happened in a foreign nation. Taken in this context, the role of corporate presence as an issue in the decision is clear, the court considered it only because and to the extent that it affected the extraterritorial analysis. The role of the statement in question about corporate presence then becomes equally clear: corporate presence within the United States is insufficient to overcome the presumption against extraterritorial application.

In other words, it would be perfectly logically consistent for the Court to say, in a later case dealing with an American corporation on otherwise similar facts: "Widget Inc.'s incorporation and continuous presence in the United States, combined with the fact that its CEO in Dallas Texas made the decisions here in question, is enough to overcome the presumption against extraterritorial application: the acts here substantially touch and concern the United States. We must now turn to the question of whether or not Widget Inc., as a corporation can be held liable for these acts under the ATS at all..." and then conclude that it can't.

In fact, consider the history of the case: 1) the Court agreed to hear it on the corporate liability question, 2) heard arguments about that question, but then 3) asked for supplemental briefing on a completely different question, and finally 4) decided the case based upon that supplemental briefing, without touching what it was asked to decide. All of this looks very much like the Court was not eager to address corporate liability under the ATS at all, which leads me to think that any decision addressing that issue will be divided and contentious.

It's also interesting that the district court decision above is in the same circuit as Kiobel I. It sets up an interesting possibility: the likely outcome is that the decision will be appealed, and that the Second Circuit Court of Appeals will likely overturn it, citing Kiobel I and stating that Kiobel II did not overrule the reasoning in Kiobel I.

If that happens, as I think likely, there would likely be an appeal again to the Supreme Court, asking it to decide, again, the same issue: corporate liability under the ATS. This time, however, there would be a split in the lower Circuit courts (between the second and ninth circuits), about the exact same issue, both of which in some way relied on the Supreme Court's own decision in Kiobel II. It might be hard for the Court to put the question off, under those circumstances.

And finally, a side note. This is at least the second time the Roberts court has published a decision based on an issue that was not actually presented to it by a lower court, but rather was presented only at the request of the Court itself. The first was Citizens United. In Citizens United, the petitioner had actually dropped the claim that the applicable Federal Law was facially unconstitutional. In the words of the dissent in that case "the majority decides this case on a basis relinquished below, not included in the questions presented to us by the litigants, and argued here only in response to the Court’s invitation. "