Looking abroad for legal answers

OCTOBER 2017 TERM

In Jesner v. Arab Bank, the U.S. Supreme Court is poised to take up the question of whether the Alien Tort Statute can be invoked against corporate defendants. Inherent to the dispute at hand is an a priori choice-of-law issue: Should courts look to international law or federal common law to resolve the question presented?

Plaintiffs and their supporters generally point to domestic law, reasoning that ATS cases are -- at base -- tort cases. As such, the plain language of the statute coupled with default liability rules governing corporations and other legal entities should apply absent compelling reasons to depart from the standard approach.

By contrast, defendants and their supporters generally insist that international law applies. They make much of the fact that there are few international fora that assert jurisdiction -- criminal or civil -- over legal persons for breaches of international law. They point in particular to the unsurprising fact that none of the international criminal tribunals convened from Nuremberg onward has exercised criminal jurisdiction over corporations for international law violations. In so arguing, they tend to overlook the fact that the Nuremberg Tribunal did exercise a form of enterprise liability by declaring certain Nazi organizations to be criminal and neglect to consider recent innovations.

Although contentious, this choice-of-law debate proves to be inconsequential given that both bodies of law point in the same direction and hand victory to the plaintiffs.

This choice-of-law exercise turns on how courts should construe the enigmatic footnote 20 from Sosa v. Alvarez-Machain. In that case, the Supreme Court set out the methodology to be employed to determine which causes of action are actionable under the ATS: Claims brought under the ATS must be accepted as a violation of international law and be defined with a degree of specificity mirroring 18th century wrongs, like piracy or violations of safe conduct. In the oft-cited footnote, the court noted that a "related consideration" to whether an international norm satisfies this test is "whether international law extends the scope of liability for a violation of a given norm to the perpetrator being sued, if the defendant is a private actor such as a corporation or individual."

Note 20 has given rise to debate as to whether the Sosa test applies beyond the causes of action at issue to govern secondary issues, such as the standards for aiding and abetting liability. The 2nd U.S. Circuit Court of Appeals, for example, ruled in Doe v. Kiobel that that international law must affirmatively extend liability to "a particular class of defendants, such as corporations," and that corporate criminal liability did not meet the Sosa standard because "[n]o corporation has ever been subject to any form of liability (whether civil, criminal, or otherwise) under the customary international law of human rights."

This observation about the lack of corporate liability before international courts is, of course, largely true (although there are some important exceptions discussed below) but it is also irrelevant. To be sure, there is no international tribunal dedicated to holding corporations civilly liable for international law violations. The International Court of Justice exercises civil jurisdiction, but only over claims between states. The ad hoc international criminal tribunals for the former Yugoslavia, Rwanda, Sierra Leone, East Timor and Cambodia can only assert criminal jurisdiction over natural persons given the terms of their constitutive statutes.

In dicta, however, these tribunals have indicated that they consider legal persons -- such as paramilitary organizations and business entities -- to be capable of violating international law. For example, the International Criminal Tribunal for Rwanda clearly considered Radio Télévision Libre des Mille Collines to be responsible for instigating genocide, although it could only convict individual principals of the organization due to constraints contained within its statute.

Drafters of the treaty establishing the permanent International Criminal Court considered empowering the ICC to prosecute corporations in connection with a proposal tabled by France. However, as explained in an amicus curiae brief by the former head of the U.S. delegation to the treaty drafting negotiations, states could not reach consensus on how such liability would operate and what penalties would follow a finding of guilt, particularly given the high degree of variation within national systems, the fact that imprisonment was the primary form of punishment available to the court, and the short time allotted for the negotiations. As a result, the ICC can exercise jurisdiction only over natural persons per Article 25. Nonetheless, as states have ratified the Rome Statute which created the ICC, they have incorporated a range of international crimes into their domestic legal frameworks, making them applicable to corporate entities in addition to natural persons.

The Special Tribunal for Lebanon offers an interesting counterexample of an international court asserting criminal jurisdiction over legal entities. Although devoted to prosecuting acts of terrorism under Lebanese law, it recently held that it had inherent jurisdiction over juridical persons accused of contempt -- specifically media outlets that released the names of protected witnesses -- because the operative provision (Rule 60bis) applied to all "persons." That conviction was preceded by an exhaustive and erudite survey of international and domestic law by the Appeals Chamber, which determined that corporate liability, civil and criminal, is a "general principle of law," one of the sources of international law recognized by the ICJ and the U.S. Supreme Court. And, the African Union has recently promulgated a draft statute for an African Court of Justice and Human Rights, not yet in force, that would include a penal chamber with jurisdiction over legal persons (Article 46C) upon "proof that it was the policy of the corporation to do the act which constituted the offense."

Although these existing and incipient institutions are primarily devoted to adjudicating individual criminal liability, international treaties increasingly empower and/or oblige their signatories to implement a full range of corporate liability for breaches. Most importantly for the Jesner case is the International Convention for the Suppression of the Financing of Terrorism. That treaty explicitly states at Article 5 that each state party "shall take the necessary measures to enable a legal entity located in its territory or organized under its laws to be held liable" when a person responsible for the management or control of that entity has committed an offense in violation of the Convention, including by funding terrorist activities. It also requires (Article 18) member states to prohibit the "illegal activities of persons and organizations that knowingly encourage, instigate, organize or engage in the commission" of acts in violation of the treaty.

Following the attacks of September 11th, the U.N. Security Council adopted a binding resolution obliging all states to implement the suite of terrorism treaties already in existence by inter alia criminalizing acts of terrorism and terrorist financing within their domestic legal systems. The terms of the Terrorist Financing Treaty are now effectively binding on all United Nations member states by virtue of states' U.N. Charter obligations to implement Chapter VII resolutions.

Treaties to address other international and transnational law violations also mandate the imposition of corporate liability and a range of penalties given the role business entities play in these violations. Examples include treaties devoted to combating transnational organized crime, human and other forms of trafficking, and bribery. Likewise, a treaty dedicated to crimes against humanity being drafted by the U.N. International Law Commission envisions corporate liability for breaches. Together, these international instruments attest to the fact that international law contains no categorical bar to the exercise of domestic jurisdiction over corporations when they commit violations of international law. Accordingly, states are free to adopt a variety of responses to corporate malfeasance, including criminal and civil suits.

The choice-of-law decision is thus inconsequential. Whether international law or domestic law governs should land the court in the same place: Corporate tort liability is a standard feature of domestic law and there is nothing in international law that would prevent the United States from providing a remedy for corporate breaches of international law under the Alien Tort Statute.