Exaggerated Rumours of Death of an Alien Tort? Corporations, Human Rights and the Remarkable Case of Kiobel

[Odette Murray is a Legal Officer at the Office of International Law, Attorney-General’s Department, Australia. David Kinley is a Professor of Human Rights Law at the University of Sydney. Chip Pitts is a lecturer in law at Stanford Law School. The views expressed in these posts are those of the authors, and not of the Attorney-General’s department or the Australian Government]

The decision of the Second Circuit Court of Appeals in Kiobel v Royal Dutch Petroleum is remarkable for a number a reasons.  It is the first time that a court (in a 2-1 split decision) has accepted the argument that the Alien Tort Statute (‘ATS’) – which gives US federal courts jurisdiction to hear tort suits brought by foreigners for violations of international law – does not encompass suits
against corporations, and that ATS suits can only be brought against natural persons.  Ironically, this
decision, which closes the door for the time being on corporate ATS suits in the Second Circuit, was decided by the very circuit court which gave new life to the ATS with its landmark decision of Filartiga in 1980, and which has adjudicated some of the most significant ATS cases, against both private individuals and corporate actors.  Kiobel is also notable for the way in which this restrictive ruling is openly predicated on the majority judges’ strong policy objections to the ATS, as demonstrated especially strongly in the judgment denying panel rehearing of 4 February 2011.

Of the many difficult questions raised by the ATS and its operation, one that has featured prominently in the jurisprudence (and was decisive in Kiobel) is the question of the so-called ‘scope of liability’ of the statute — that is, who can be liable under the ATS (state actors, private actors, individuals or corporations) and how can they be liable (for their direct actions, for aiding and abetting a principal perpetrator, or for being complicit in the wrongful actions of others)?  To determine this scope of liability under the statute, courts must also determine the antecedent question of what law governs that determination, that is, US domestic law (eg federal common law) or international law.  And as decisions such as Khulumani, Talisman and Kiobel show, a court’s decision to look to federal common law or international law to determine rules on the liability of private actors or corporations, and aiding and abetting or complicity, can have a significant impact on the outcome of an ATS claim.

In (very) short summary, the decision of the majority in Kiobel proceeds as follows: first, drawing on Sosa, and Second Circuit precedent from Filartiga to Khulumani, the majority determine that the question of whether a corporation can be held liable for a violation of the law of nations is a question that must be answered by reference to international law itself.  Secondly, having determined that the governing law is that of international law, the majority consider whether corporations can be liable
under customary international law and determine that there is no ‘norm of corporate liability’ in customary international law. The majority chiefly rely on their factual understanding that no international tribunal has (to date) had formal jurisdiction over a corporation and that international law has not (to date) imposed criminal liability on corporations.  The majority’s reasoning is met by a fierce dissent by Judge Leval, who, through a series of criticisms of the majority’s reasoning (some more effective than others) concludes that corporations can be held liable under the ATS.

In our article we explore two main themes: how the majority could decide the way they did in Kiobel and why that decision is wrong.  The first prompts us to look into the various ‘choice of law’ debates that have featured in the jurisprudence in order to recognise how the majority in Kiobel could determine both that international law governs the question of corporate liability and that there is no norm of corporate liability in international law.  The balance of the article considers the reasoning in the Kiobel decision itself, and posits three main criticisms: first, federal common law and not international law governs the question of corporate liability under the ATS; secondly, the majority’s reasoning erroneously limits ATS causes of action to those violations of the law of nations which constitute crimes under international law, contrary to Sosa and the Second Circuit’s own precedents; and thirdly, practice and policy confirm that corporations can violate and have violated norms of international law.

As to the first of these criticisms, we argue that, after Sosa, it is clear that an ATS cause of action — that is, the right to sue — arises under federal common law. Therefore, the reasoning of the majority in Kiobel, that unless a corporate defendant would be directly liable for its conduct under international law then it cannot be liable under the ATS, is contrary to Sosa and a host of other precedents. The ‘law of nations’ aspect of an ATS claim is not that the right to sue (or be sued) has to be identified in international law but rather that the conduct alleged must violate a norm of international law that meets the standard set down in Sosa of being ‘a norm of international
character accepted by the civilized world and defined with a specificity comparable to the features of the 18^th century paradigms we have recognized [of piracy, violation of safe conducts, and infringement of the rights of ambassadors].’

Our second criticism is that the majority effectively reduce ‘violations of the law of nations’ under the ATS to international crimes. This is because the majority argue that corporate liability is a question of international law, and that the only form of direct responsibility in international law for private actors is that of criminal responsibility. As the precedents make clear, however, the ATS is not limited to suits alleging conduct amounting to international crimes, but includes any violation of international law that meets the Sosa standard.

Our third criticism is that the majority’s analysis of whether corporations are ‘subjects’ of international law is in error, for the simple reason that such analysis is irrelevant to the question of whether the
United States, through the enactment of a statute, could impose domestic civil liability on corporations for conduct that violates international law.  In fact, as we argue, corporations have
increasing capacities, rights and duties in international law, which should help assuage the manifest discomfort that some US circuit judges apparently feel for ATS suits against corporations.  On this apparent discomfort (or indeed, hostility to ATS suits), we conclude by considering some of the misplaced factual understandings and policy rationales that underpin the Kiobel majority’s manifestly
erroneous and restrictive ruling.

The full article may be accessed here.