Supreme Court Nixes Suits Against Foreign Corporations in U.S. Courts Alleging Violations of International Law

If domestic courts are to be a forum for these sorts of suits, five justices conclude, Congress must first say so.

May foreign corporations be held liable for alleged violations of international law in U.S. courts under the Alien Tort Statute? No, concluded the Supreme Court in 5-4 decision released today. If suits against foreign corporations for international law violations are to proceed in U.S. court, the Court concluded in Jesner v. Arab Bank, they first must be authorized by Congress.

Justice Kennedy announced the judgment of the Court and wrote an opinion that spoke for a five-jsutice majority of the Court in parts, and a three-justice plurality in others. Justice Kennedy was joined in full by the Chief Justice and Justice Thomas. Justice Alito and Justice Gorsuch each wrote separate opinions concurring in part and concurring in the judgment. Justice Thomas also wrote separately to note that he agreed with Justices Gorsuch and Alito, but also concluded Justice Kennedy's opinion properly applied hte Court's precedents to this case. Justice Sotomayor dissented, joined by Jsutices Breyer, Kagan, and Ginsburg.

The question in Jesner was a long time coming. The Court had been asked to conclude that the ATS does not authorize suits against corporations before in Kiobel v. Royal Dutch Petroleum, but found it could resolve that case on other grounds. In Kiobel, the Court held there was no jurisidiction over claims where all of the alleged relevant conduct occurred outside of the United States. Thus, a group of Nigerian citizens could not sue British and Dutch oil companies in a U.S. federal court for actions allegedly taken in Nigeria.

The issue in Jenser was whether petitioners could sue an Arab Bank for allegedly assisting terrorist organizations, in violation of international law. Applying prior Supreme Court precedent, Justice Kennedy concluded they could not. Under Sosa v. Alvarez-Machain, there can only be a cause of action under the ATS for conduct that violates "a norm that is specific, universal, and obligatory." In addition, for a case under the ATS to proceed, courts must also conclude that llowing a case to proceed "is a proper exercise of judicial discretion," in the absence of express political authorization. In applying these tests, Justice Kennedy noted that "The international community's conscious decision to limit the authority of [specified] international tribunals to natural persons counsels against a broad holding that there is a specific, universal, and obligatory norm of corporate liability under currently prevailing international law." Combined with the Court's traditional reluctance to recognize implied causes of action, it was easy for Justice Kennedy to conclude the ATS does not authorize such suits against foreign corporations.

Justice Kennedy's opinion concludes:

With the ATS, the First Congress provided a federal remedy for a narrow category of international-law violations committed by individuals. Whether, more than two centuries on, a similar remedy should be available against foreign corporations is similarly a decision that Congress must make.

The political branches can determine, referring to international law to the extent they deem proper, whether to impose liability for human-rights violations upon foreign corporations in this Nation's courts, and, conversely, that courts in other countries should be able to hold United States corporations liable. Congress might determine that violations of international law do, or should, impose that liability to ensure that corporations make every effort to deter human-rights violations, and so that, even when those efforts cannot be faulted, compensation for injured persons will be a cost of doing business. If Congress and the Executive were to determine that corporations should be liable for violations of international law, that decision would have special power and force because it would be made by the branches most immediately responsive to, and accountable to, the electorate. . .

These and other considerations that must shape and instruct the formulation of principles of international and domestic law are matters that the political branches are in the better position to define and articulate. For these reasons, judicial deference requires that any imposition of corporate liability on foreign corporations for violations of international law must be determined in the first instance by the political branches of the Government.

As noted above, Justices Alito and Gorsuch each wrote separate opinions, concurring in part and concurring in the judgment. Justice Alito's separate opinion begins:

Creating causes of action under the Alien Tort Statute against foreign corporate defendants would precipitate exactly the sort of diplomatic strife that the law was enacted to prevent. As a result, I agree with the Court that we should not take that step, . . . . I write separately to elaborate on why that outcome is compelled not only by "judicial caution," ante, at 27 (majority opinion), but also by the separation of powers.

It concludes:

Creating causes of action under the ATS against foreign corporate defendants would be a no-win proposition. Foreign corporate liability would not only fail to meaningfully advance the objectives of the ATS, but it would also lead to precisely those "serious consequences in international affairs" that the ATS was enacted to avoid. Sosa, 542 U. S., at 715. Under those circumstances, federal courts have a duty to refrain from acting. Although that may make it more difficult for aliens to hold foreign corporations liable for human rights abuses, we have repeatedly rejected the view that the ATS was meant to transform the federal courts into forums for the litigation of all human rights suits. . . . Declining to extend the ATS to foreign corporate defendants is thus not about "[i]mmunizing corporations that violate human rights," post, at 34, but rather about furthering the purpose that the ATS was actually meant to serve—avoiding diplomatic strife.

Justice Gorsuch's opinion begins:

I am pleased to join the Court's judgment and [specified parts] of its opinion. Respectfully, though, I believe there are two more fundamental reasons why this lawsuit must be dismissed. A group of foreign plaintiffs wants a federal court to invent a new cause of action so they can sue another foreigner for allegedly breaching international norms. In any other context, a federal judge faced with a request like that would know exactly what to do with it: dismiss it out of hand. Not because the defendant happens to be a corporation instead of a human being. But because the job of creating new causes of action and navigating foreign policy disputes belongs to the political branches. For reasons passing understanding, federal courts have sometimes treated the Alien Tort Statute as a license to overlook these foundational principles. I would end ATS exceptionalism. We should refuse invitations to create new forms of legal liability. And we should not meddle in disputes between foreign citizens over international norms. I write because I am hopeful that courts in the future might pause to consider both of these reasons for restraint before taking up cases like this one. Whatever powers courts may possess in ATS suits, they are powers judges should be doubly careful not to abuse.

Justice Sotomayor took a different view. Her dissent begins:

The Court today holds that the Alien Tort Statute (ATS), 28 U. S. C. §1350, categorically forecloses foreign corporate liability. In so doing, it absolves corporations from responsibility under the ATS for conscience-shocking behavior. I disagree both with the Court's conclusion and its analytic approach. The text, history, and purpose of the ATS, as well as the long and consistent history of corporate liability in tort, confirm that tort claims for lawof-nations violations may be brought against corporations under the ATS. Nothing about the corporate form in itself raises foreign-policy concerns that require the Court, as a matter of common-law discretion, to immunize all foreign corporations from liability under the ATS, regardless of the specific law-of-nations violations alleged. I respectfully dissent.

She concludes:

In categorically barring all suits against foreign corporations under the ATS, the Court ensures that foreign corporations—entities capable of wrongdoing under our domestic law—remain immune from liability for human rights abuses, however egregious they may be.

Corporations can be and often are a force for innovation and growth. Many of their contributions to society should be celebrated. But the unique power that corporations wield can be used both for good and for bad. Just as corporations can increase the capacity for production, so, too, some can increase the capacity for suffering. Consider the genocide that took upwards of 800,000 lives in Rwanda in 1994, which was fueled by incendiary rhetoric delivered via a private radio station, the Radio Télévision Libre des Mille Collines (RTLM). Men spoke the hateful words, but the RTLM made their widespread influence possible.

There can be, and sometimes is, a profit motive for these types of abuses. Although the market does not price all externalities, the law does. We recognize as much when we permit a civil suit to proceed against a paint company that long knew its product contained lead yet continued to sell it to families, or against an oil company that failed to undertake the requisite safety checks on a pipeline that subsequently burst. There is no reason why a different approach should obtain in the human rights context.

Immunizing corporations that violate human rights from liability under the ATS undermines the system of accountability for law-of-nations violations that the First Congress endeavored to impose. It allows these entities to take advantage of the significant benefits of the corporate form and enjoy fundamental rights, see, e.g., Citizens United v. Federal Election Comm'n, 558 U. S. 310 (2010); Burwell v. Hobby Lobby Stores, Inc., 573 U. S. ___ (2014), without having to shoulder attendant fundamental responsibilities.