Landmark Supreme Court Opinion Shuts Door to ATS Suits Against Foreign Corporations

Introduction 

Since the “rediscovery” of the U.S. Alien Tort Statute (ATS) in 1980, and the subsequent growth of ATS litigation seeking compensation in U.S. courts for human rights abuses committed abroad, a key question facing litigants in cases brought under the ATS has been whether or not plaintiffs can bring international law claims against corporate defendants, as opposed to only against individuals. Several years ago, the U.S. Supreme Court granted certiorari in Kiobel v. Royal Dutch Petroleum to decide this question, only to resolve the case by applying the presumption against extraterritoriality, leaving plaintiffs and defendants alike uncertain as to the scope of corporate liability under the ATS. Last week, nearly five years to the day since Kiobel was decided, the Supreme Court issued a 5-4 opinion in Jesner v. Arab Bank Plc., foreclosing foreign plaintiffs’ ability to bring human rights claims against foreign corporations under the ATS. The opinion promises to reshape the landscape of human rights litigation in the United States and could have a substantial impact on lawsuits brought by terror victims.

Key Takeaways

1)  The ATS does not provide jurisdiction for U.S. courts to adjudicate claims brought against foreign corporate entities . . .

2)  . . . however, claims may be brought against corporate directors, officers and employees, who may be the beneficiaries of indemnification arrangements and/or corporate insurance policies.

3)  Notwithstanding the ability to bring human rights claims against corporate directors and officers under the ATS, we expect that human rights plaintiffs will also consider bringing human rights claims outside the United States, while seeking broad U.S.-style discovery from corporate defendants pursuant to Section 1782 (the federal statute that allows a party to a legal proceeding outside the US to apply to a US court to obtain evidence for use in a foreign or international tribunal).

4)  Meanwhile, the Supreme Court’s opinion appears to leave open the question of whether claims can be brought under the ATS against U.S. corporate entities, although the Court’s reasoning and the views of the plurality with respect to the question of corporate liability under international law strongly suggest that such claims are unlikely to succeed in the absence of congressional action.

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http://knowledge.freshfields.com/en/Global/r/3754/landmark_supreme_court_opinion_shuts_door_to_ats_suits