Companies Won't Be Held Liable in U.S. for Bad Acts Abroad

Article Placeholder Image
By Robyn Hagan Cain on April 17, 2013 1:00 PM

Until today, there was a 3-1 split regarding whether aliens could use the Alien Tort Statute to sue corporations in U.S. courts for human rights offenses committed overseas. The D.C. Circuit, (John Doe VIII et al v. Exxon Mobil Corp et al), the Ninth Circuit, (Sarei v. Rio Tinto), and the Seventh Circuit, (Flomo v. Firestone Natural Rubber Co.), had all ruled that federal courts have jurisdiction over alien claims under the ATS.

The Second Circuit Court of Appeals was the lone outlier, finding that aliens couldn't bring ATS claims against foreign companies doing business overseas.

The Second Circuit's ruling, however, received a vote of confidence from the only court that really matters. Today, the Supreme Court ruled against a group of Nigerian plaintiffs who claimed that Royal Dutch Petroleum Company -- better known as Shell Oil -- aided and abetted the Nigerian government in committing human rights abuses against them.

Though all the Justices seems to agree that U.S. courts can’t rule on the merits of Kiobel, the Court was split regarding the reasoning.

Chief Justice John Roberts, writing for the conservative majority, concluded that the ATS did not provide for “relief for violations of the law of nations occurring outside the United States,” The Washington Post reports.

Justice Stephen Breyer, writing for the liberal block, disagreed with Roberts’ presumption that U.S. laws don’t have extraterritorial reach, and suggested that the ATS could confer jurisdiction when the defendant’s conduct “substantially and adversely affects an important American national interest, and that includes a distinct interest in preventing the United States from becoming a safe harbor (free of civil as well as criminal liability) for a torturer or other common enemy of mankind.”

While human rights advocates criticize the decision for undermining the U.S. role as a human rights leader, U.S. corporations are likely relieved that the Court issued a pro-business ruling in the matter.

Ideally, no one needs a pro-plaintiff ATS ruling to persuade them that corporations should avoid beating and pillaging overseas, but if basic tenants of decency aren’t enough to convince companies that it’s better to be nice, keep this in mind: a tort suit in the U.S. isn’t the only concern. While foreign plaintiffs in this situation may not be able to bring their case in the U.S., companies can be held liable in the country where the abuse occurred.

Even more compelling? Consumers can boycott a business if they get wind of any bad behavior.

Related Resources: