Bradley & Goldsmith: Corporate ATS Litigation is a “Luxury We Can No Longer Afford.”

Curtis Bradley and Jack Goldsmith have a new op-ed taking aim at the latest decision in the ongoing Alien Tort Statute case involving U.S. corporations who did business during South Africa apartheid era.  In fact, they take issue with the whole wave of ATS litigation attempting to hold corporations liable under aiding and abetting liability, using the South Africa case as an example. 

The South African case, brought by class-action attorneys many years after apartheid ended, is a dramatic example. The South African government opposed the litigation on the grounds that it would interfere with the policy embodied by its Truth and Reconciliation Commission, which “deliberately avoided a ‘victor’s justice’ approach to the crimes of apartheid.” The Bush administration’s State Department opposed the lawsuit, arguing that it “risks potentially serious adverse consequences for significant interests of the United States” by threatening international economic relations as well as political relations with South Africa and other countries whose firms are defendants.

This should have been enough for dismissal. Five years ago, the Supreme Court said in reference to the South Africa litigation that “there is a strong argument that the federal courts should give serious weight to the Executive Branch’s view of the case’s impact on foreign policy.” Yet the New York court, unpersuaded, concluded that allowing the lawsuit to proceed “would not contradict American foreign policy in a manner that would ‘seriously interfere with important governmental interests.’ ” Thus it supplanted its foreign policy views for those of the federal government and refused to respect South Africa’s efforts to move its society forward.

More significant, the court ruled that firms were liable for a foreign government’s human rights violations, even if they did not engage in the abuses or intend to facilitate them, as long as companies were aware that their business activities would substantially assist the government’s illegal practices. This put GM and Ford on the hook for supplying trucks that the South African government used to attack anti-apartheid activists, and IBM for providing computers and software that the government used to register and segregate individuals.

The underlying acts associated with apartheid are abhorrent. But it is crass retroactivity to say that these firms are legally responsible for actions of the South African government. Under the New York court’s standard, a great deal of global investment in the developing world would now be subject to U.S. judicial scrutiny.

They also point out that Harold Koh, the likely State Department Legal Advisor, is a supporter of the plaintiffs in this case and, is unlikely to try to block these lawsuits in general.