SCOTUS Holds Alien Tort Statute Cannot Be Used to Sue Foreign Corporations

April 27, 2018

Resolving a circuit split, the U.S. Supreme Court held on April 24, 2018 that common law liability under the Alien Tort Statute (ATS) does not extend to foreign corporations. Jesner v. Arab Bank, PLC, No. 16-499, 2018 WL 1914663 (2018).

The Jesner plaintiffs alleged that they, or their family members, had been injured or killed by terrorist attacks perpetrated in the Middle East. The defendant, Arab Bank, PLC, is a foreign corporation based in Jordan, which the plaintiffs claimed permitted the terrorist groups to maintain accounts at the bank and transfer funds through its New York branch.

The ATS allows aliens to bring claims in the United States for torts “committed in violation of the law of nations or a treaty of the United States.” 28 U.S.C. § 1350. The ATS does not specify who is a proper defendant under the statute. The question before the Supreme Court in Jesner was whether Arab Bank, as a foreign corporation based in Jordan, could be liable to the plaintiffs under the ATS.

Congress enacted the ATS in 1789 as a purely jurisdictional statute, intending for aliens to rely on it for U.S. jurisdiction over federal common law claims. Following the abrogation of federal common law, the Supreme Court decided in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), that it retained jurisdiction over causes of action for violations of international norms that were consistent with those recognized in 1789. Before recognizing a cause of action, however, courts must perform Sosa’s two-step analysis. First, courts must determine whether the defendant violated an international norm that is “specific, universal, and obligatory.” They then must consider whether the case is appropriate for judicial consideration or if the political branches must first recognize the cause of action. 

The plaintiffs argued that Sosa supported recognition of ATS suits against corporations because international conventions and analogous federal law have created an international norm of corporate liability. The Court disagreed, holding that Congress was the proper body to determine whether foreign corporations are permissible defendants in ATS causes of action. 

In reaching its holding, the Court generated five separate opinions totaling nearly 100 pages. Justice Kennedy authored the opinion of the Court, but only Chief Justice Roberts and Justice Thomas joined all of that opinion. Justices Alito and Gorsuch joined portions of Kennedy’s opinion, and Justices Thomas, Alito, and Gorsuch each authored individual concurrences. Justice Sotomayor authored a dissent on behalf of the four remaining justices. The full decision can be accessed here. 

Jesner will have broad and immediate impact by barring suits by foreign plaintiffs against foreign corporations in U.S. courts based on human rights violations. Notably, Jesner does not impact foreign plaintiffs’ ability to sue U.S. corporations in U.S. courts; nor does it impact the rights of U.S. plaintiffs to sue foreign corporations in U.S. courts. Because of the variety of individual opinions generated by the decision, Jesner will also be a useful tool towards discerning the Justices’ individual approaches to statutory interpretation.

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