Alien Tort Statute should preclude corporate liability

OCTOBER 2017 TERM

On Oct. 11, the U.S. Supreme Court will hear argument in Jesner v. Arab Bank PLC, which presents the question whether corporations, as opposed to natural persons, may be sued for violations of international law under the Alien Tort Statute. The answer should be no — at least without further direction from Congress.

Enacted as part of the Judiciary Act of 1789, the ATS gives federal courts jurisdiction over “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.” 28 U.S.C. Section 1350. On its face, the statute’s text provides no answer to the question of corporate liability. But this case shouldn’t turn on statutory interpretation; the answer lies instead in a straightforward application of the cautious federal-common-law approach articulated in the Supreme Court’s ATS jurisprudence.

In its leading ATS decision, Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the Supreme Court explained that the ATS merely grants jurisdiction and does not create any private rights of action. But, to avoid the oddity of a jurisdictional grant without any accompanying cause of action, the court interpreted the ATS as allowing federal courts to recognize causes of action under federal common law for a narrow class of clearly established international norms. The court cautioned, however, that this authority is exceedingly narrow — the judiciary must engage in “vigilant doorkeeping” and “has no congressional mandate to seek out and define new and debatable violations of the law of nations.” Sosa thus limited courts to recognizing causes of action only for violations of international law norms that are “specific, universal, and obligatory.”

The Jesner plaintiffs — petitioners before the Supreme Court this term — argue that this inquiry into whether there’s an international consensus is necessary only in delineating which violations of the law of nations are actionable. The argument then goes that defining the international norm has nothing to do with who should be the defendant; the latter question is left to domestic federal common law, which readily accepts the idea of corporate liability.

This approach is mistaken, for at least three reasons.

First, Sosa instructs that the inquiry into whether international law is sufficiently established also applies in deciding whether to extend “liability for a violation of a given norm to the perpetrator being sued.” It’s possible that, in saying this, the Supreme Court had in mind the distinction between nation-states and private entities, not between different types of private entities. But if anything, the same logic should apply with even greater force to artificial private entities like corporations. International law has historically concerned itself primarily with agreements between, and obligations among, nation-states. World War II famously expanded this defendant class to individuals, but even the Nuremburg Tribunal made clear this expansion did not apply to business organizations. More recent international tribunals — the International Criminal Tribunal for the former Yugoslavia, the International Criminal Tribunal for Rwanda, and the International Criminal Court — have followed suit, and cover only individuals, not corporations. Today the concept of corporate liability under international law is at best nascent, and has not even remotely ripened to the point of imposing the type of “specific, universal, and obligatory” duties contemplated under Sosa.

Second, courts must proceed with caution before expanding federal common law, which is itself an anomaly in our system of government in which Congress — not the courts — is charged with making law. Indeed, the Supreme Court has repeatedly insisted that courts fashion federal common law only in the interstices of what Congress has enacted. For this reason, the Supreme Court has rejected corporate liability in Bivens actions — federal common law allowing damages suits for violations of the constitution by federal officials. Likewise, recognizing the need for judicial restraint in the ATS context, Sosa instructs courts to “look for legislative guidance before exercising innovative authority over substantive law.” As it happens, Congress has already legislated in an analogous space — the Torture Victim Protection Act — and it provided for suit against only “individuals,” not corporations.

Finally, the Jesner plaintiffs’ approach invites courts to risk adverse foreign policy consequences in an area in which the Supreme Court in Sosa admonished courts to be “particularly wary of impinging on the discretion of the Legislative and Executive Branches.” And Jesner presents a perfect example of how expanding corporate liability might do just that: the Kingdom of Jordan — one of the U.S.’s closest allies in the Middle East — filed an amicus brief on behalf of Arab Bank (Jordan’s largest bank) decrying a legal theory that might result in the bank’s failure.

In sum, there is no consensus under international law in favor of corporate liability, and principles of judicial restraint — especially in the area of foreign affairs — counsel strongly against expanding the ATS in this manner.

One can debate the merits of authorizing private damages suits against corporations for alleged international law violations, as opposed to enforcing such violations through the criminal process, which is subject to the check imposed by prosecutorial discretion. But it seems unquestionable that Congress is better positioned than the judiciary to weigh the costs and benefits of corporate liability and make these important and complex foreign policy decisions.

Ultimately, my view is that although the Supreme Court did not decide the corporate liability question in Sosa, the Supreme Court’s approach to the ATS in 2004 should preclude corporate liability — and for good reason. International law has not yet stepped into the fray of corporate liability, and the court should not make that leap on its own initiative.

The views expressed in this article are his own, and do not necessarily represent the views of Horvitz & Levy.