In House - The FindLaw Corporate Counsel Blog

No Foreign Corp. Liability Under Alien Tort Statute

A ruling handed down recently by SCOTUS may have a select few foreign corporations breathing a little easier moving forward.

The Jensen v. Arab Bank case was on appeal to the High Court over how tied a foreign corporation had to be to the United States in order for it to be held liable under the Alien Tort Statute. The lower courts had found that Arab Bank lacked sufficient activity in the United States related to acts of terrorism that occurred abroad for it to be held liable. SCOTUS not only agreed, it ruled that the Alien Tort Statute could not be applied to a foreign corporation at all.

Justices Aren't Diplomats

While the dissent, authored by Justice Sotomayor, offers a scathing criticism of the Court's holding, the message of the majority seemed loud and clear: They feared getting involved in potential foreign policy matters.

The decision explicitly explained that unless Congress took action to extend the ATS to foreign corporations, it would not. Justice Kennedy noted that the case has resulted in diplomatic tension for over a decade. He explained that courts are not "well suited to make the required policy judgments implicated by foreign corporate liability."

While the United States Supreme Court majority opinion claimed to be refraining from further upsetting foreign relations, it seems a bit counterintuitive that the Court would even consider foreign policy as basis for denying liability.

Will Congress or the President Respond?

Interestingly, the Department of Justice's brief was filed in support of the plaintiffs in the case last year. The DOJ brief supported finding corporate liability in ATS cases. It pointed out that no other circuit beyond the Second had reached a similar holding, and that "nothing in international law discountenances civil claims against corporations."

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