The ATS, Incentives, and Tradeoffs

by Kenneth Anderson

Yesterday was a busy day in International-Foreign-Relations-Law-Land, between the Eric Holder speech on national security and targeted killing at Northwestern University and the quite unexpected announcement that the Alien Tort Statute case of Kiobel will be re-argued in the Supreme Court. Let me add a comment from former DOS Legal Adviser John Bellinger at Lawfare:

 

The Court’s order may reflect that a majority or plurality of the justices would like to decide the case on the larger issue of whether the Alien Tort Statute even applies to torts committed in other countries, rather than on the narrower issue of corporate liability, and that other justices want to have more briefing on the issue, which was not addressed by the Second Circuit. As I noted in my post about last week’s oral argument, Justices Kennedy, Roberts, and Alito focused almost all of their questions on the diplomatic tensions and problems under international law caused by extraterritorial application of the ATS. This was also the issue that I addressed in my own amicus brief, and that was the focus of the amicus briefs of the Netherlands, Britain, and Germany ….

This development will put the Obama Administration in a difficult position. In its original amicus brief in support of the petitioners, the Administration argued in favor of corporate liability, but made no mention of the numerous diplomatic complaints about the ATS filed by other countries. Assuming that the Administration files a new amicus brief, it will face a dilemma. It will either have to argue against extraterritorial application, contrary to the position of human rights groups and undercutting its prior argument in favor of corporate liability. Or it will have to argue in favor of extraterritorial application of the ATS (at least in some circumstances), which is contrary to the position of many foreign governments and inconsistent with international law principles of jurisdiction. As three members of the International Court of Justice said in the Congo Arrest Warrant case, “[w]hile this unilateral exercise of the function of guardian of international values has been much commented on, it has not attracted the approbation of States generally.” Moreover, the Obama Administration would have to reverse the arguments against extraterritorial application of the ATS made by the Bush Administration in its brief to the Supreme Court in 2008 in the Apartheid case (which the Solicitor General may be reluctant to do). This may be one reason why the Administration asked the Supreme Court not to address the issue of extraterritoriality in its original amicus brief.

 

One might also add that the amicus brief drafted by Jack Goldsmith in support of defendant corporation Shell seems to have had an effect; Goldsmith and his amicus brief were mentioned by name in the oral argument.  The Goldsmith brief was not primarily about extraterritoriality – it was much more about whether this was international law as such, or instead some kind of well-intentioned but nonetheless faux-international law committed to the hands of US courts.  (I have sometimes referred to it here at Opinio Juris as the “law of the hegemon” which US district courts have been persuaded by ATS plaintiffs’ lawyers, mistakenly  in my view, to regard as “international law.”)

This then combines with a general worry on the part of Justice Alito – but not he alone – that particularly the alien-to-alien cases taking place in an alien land simply have no reason to be in US courts, and that what little can be gleaned about the history and purpose of the statute does not support extraterritorial application, at least in the territory of another sovereign.  Piracy on the high seas, yes – and hence presumably the importance of the qualifier in the Court’s briefing instructions to address not extraterritoriality as such, but instead territory of another sovereign. (But see Jordan Paust and Eugene Kontorovich each commenting separately on the piracy issue, below.)

There are things that run to consequences and incentives that I wish could be got in front of the Justices that I, as a non-litigator, don’t really know how to frame in briefing terms.  One is this confusion of international law and “law of the hegemon”; OJ readers understand that I am Good With Hegemony, but worry about whether the judiciary should set about enforcing it without further instruction and structure from Congress.  Another is that there are many real-world problems of perverse incentives created by the breadth of the ATS.  The most obvious is that the best is the enemy of the good.  Is it really such a good idea to push Western countries’ corporations out of places like Sudan and leave them to the investment practices of Chinese corporations?  It is of course true that the concerns about perverse incentives also run the other way, such as the incentive to locate in some place with weak environmental or labor regulation in the first place; my view is that those are more widely understood as background assumptions than these other less visible incentives problems, and I think the ones I raise here are more important than commonly understood, so I concentrate on them.

This problem of pushing out pretty good companies that are subject to real human rights pressures in a regulatory way – provided that they don’t conclude that the risk of damages, bad publicity, etc., makes it more prudent to sell to Chinese companies – is exacerbated by Sosa standards, ironically.  Sosa says the norms alleged to have been violated have to be really serious – genocide, crimes against humanity, slavery, piracy, that sort of thing.  So: you are the senior executives and board of directors of some American or Canadian company that has invested in a rubber plantation in Africa somewhere; well aware of the public relations, legal, and damages issues involved in various labor practices, particularly child labor, you have various systems in place, but you know perfectly well they won’t be perfect.

When the ATS lawsuit comes, however, in order to make it out under Sosa, your company and perhaps you personally are accused of slavery and maybe crimes against humanity.  Not merely violations of labor practices under some jurisdiction – but slavery.  We are all aware of the bad publicity problems for the company – but often neglected is the fact that these executives think these charges are horribly unfair and vicious to them personally, and way outside of the scope of litigation that ought to be applied – labor regulatory standards, at a level suited to determining if there are adequate safeguards in place, fines, sure, serious deterrents, sure, but slavery?  They take it personally.  Occasionally they fight, because they want to clear their own names.  But often business prudence prevails and they settle quietly.  But – they often decide, if they hadn’t decided long before, to avoid the whole ugliness and sell the business.  Is that such a good idea?

It is quite true that this argument can easily backfire – says the company, don’t enforce these standards, because even the slightly better is still the enemy of the not-very-good, and if you do anything to force us to a level of behavior marginally above the level of the worst actor, we’ll leave.  That’s a form of hostage-taking argument.  But the point is that there are tradeoffs, and I have doubts that US district courts are the right institutions to make them.  Back in the 1990s, for example (and this is not an ATS case), a human rights organization asked me to go to Guatemala, a country I knew well, to look at the labor practices of a shirt manufacturer that operated maquiladoras there.  The head of the company was a leader in labor and environmental standards in his business, and the organization made a point of inviting him onto its board in an experiment in trying to find common ground with progressive business leaders.  Now his company was accused of child labor violations and various other things.

So I went down to look and didn’t find much; there might have been some instances of teens working in the plant underage, but no one disputed policy and there was a system of inspectors in place.  Again, this wasn’t about the ATS, though it might have morphed into a suit.  Instead what remains most important today out of that situation was the conversation I had with the then-labor minister in Guatemala, an ex-leftist who had been with the opposition during the civil war and whose not merely progressive, but revolutionary, credentials were impeccable.

When I told him that there was pressure for this company to close its plant, he was aghast.  He said, in impassioned terms, this would be terrible.  The company might have had an occasional child labor violation, he said, but it had inspectors who were clean, it offered child care, a clinic, and sent the kids of the women to school, and provided milk for the families.  None of the Asian maquiladoras would ever consider such a thing – on the contrary, they fired the Indian girls immediately if they found out they were pregnant (what he actually said was, I know of one maquiladora from Asia where the security guard threatens to punch the women in the stomach when they come in the door to start work to see if they will say no because they are pregnant).  I have hundreds of illiterate peasant girls streaming into the city every month, he said – I want your American company to open dozens more plants to absorb them, on these terms.  It’s that or prostitution.

The American company decided the potential bad publicity wasn’t worth it and closed the plant; I’m sure the marginal, if tiny, increase in Central American labor costs had something to do with it as well.  But note:  the human rights advocates were not unhappy with that decision.  Since they had no welfare obligations for the Indian women at stake, they could afford to stand on perfect principle; no hard tradeoffs for them.  Not so the labor minister.

Now, this is not about the ATS as such and I have no idea how one gets that notion of forward looking incentives before the Court.  But I would hope that these kinds of incentives questions could be inserted into the discussion somehow.  At a minimum, one might wonder whether the 18th century ATS – a one-sentence statute – is sufficient ground for the judiciary to supervise these incentives and tradeoffs, or whether these are deep policy questions which Congress would have to commit more explicitly, and in some kind of serious statutory framework, over to the District Courts for adjudication.

(There are other incentives one could mention as well.  For example, what about the effect of damage awards that might much higher in the US than would typically be awarded in other jurisdictions? Shouldn’t the Justices be aware of the economic incentives that might exist for forum-shopping?  How would something like this get raised, if at all?  Again, I am concentrating on the ones I know best and am most interested in, which run mostly to defendant-side arguments; I’m sure that there are lots of hidden ones that can be raised as well from the side of plaintiffs.)

http://opiniojuris.org/2012/03/06/the-ats-incentives-and-tradeoffs/

19 Responses

  1. Response…
    Haven’t we had enought of lawyers from the Bush Administration who did not resign in the fact of serial crimnality?
    Again, piracy is not committed “on” the high seas but on the falg of some vessel, which is the equivalent of foreign territory, and there is universal jurisdiciton under international law even if there are no contacts with the forum.  See my Op Ed at Jurist.
    Bellinger is in patent error when suggesting that under international law concerning jurisdiciton the ATS cannot be applied extraterritorially, given universal jurisdiction and past Ops. of the Att’ys Gen. and cases.

  2. Jordan: I don’t think the ad hominem attack is appropriate and in any case it distracts from your substantive remarks about piracy.

  3. The Supreme Court in 1820 (US v Furlong) interpreted the federal piracy statute to consistent with the presumption against extaterritoriality:; foreign-cubed piracy was excluded, even though this required some stretch against the statutory language. In other words, US law does not, absent a clear statement to the contrary, go as far as international law in this regard. So I think piracy very much cuts the other way for the ATS. See Eugene Kontorovich, The “Define and Punish” Clause and the Limits of Universal Jurisdiction, 103 NORTHWESTERN UNIVERSITY LAW REVIEW 149 (2009)

  4. Eugene, are you referring to United States v. Palmer (which the Bush Admin. had relied on in its Sosa brief)? The problem there is that Congress thought Marshall’s opinion was no good, and he probably did too, trying to atrophy it just two years later in Klintock by simply calling the vessel “stateless”. The reason it was no good was because applying the presumption actually crippled the U.S. international responsibility to punish piracy, thereby perversely risking international discord by not applying U.S. law to extraterritorial conduct. The result, as you know, was the immediate passage of a new piracy statute overruling Palmer and extending U.S. law to “any person or persons whatsoever” who “shall, on the high seas, commit the crime of piracy, as defined by the law of nations.” See A Unified Approach to Extraterritoriality, 97 Va. L. Rev. 1019, 1061-1075 (discussing these cases (and relying on your great work on piracy)).

  5. If I understand it correctly there is no problem in violating the sovereignty of other states when U.S. invades other countries for oil, kills people with drones, abducts, tortures and rapes El-Masri. One can even sue foreign states when designated by U.S. as terrorist. But sovereignty becomes a problem when big bucks are held accountable.

  6. Prof. Kontorovich:

    U.S. v. Furlong addressed the crime of piracy, whereas the ATS is a civil statute.  The law of nations AND U.S. LAW have long recognized that piratical vessels and bona piratarum (even landed) are subject to civil forfeiture and that goods seized by pirates belonging to innocent persons is subject to civil salvage awards. The Brig Malek Adhel; Davison v. Seal Skins; Strout v. Brig Cuba; 33 U.S.C. secs. 344 & 345.   Your point about the presumption against extraterritoriality is misplaced. 

    Francisco Forrest Martin

  7. Response…
    and Furlong recognized the validity of “universal jurisdiction. Klintock recognized this point when declaring that it is punishable in the “courts of all” and our courts are “authorized and bound to punish.”

  8. Prof. Colangelo: Palmer &Furlong were reversed by Congress, which is just as it should be. That is why it is called a “presumption” – Congress bears the burden of reversing it. Indeed, in the original piracy statute, one could argue Congress had already spoken more clearly than with the ATS. I don’t see Congress’s action in 1820 as an indictment of Marshall’s approach, but rather evidence of it correctly allocating the responsibilities of the branches in foreign relations matters. In the current case I think people are just worried Congress would not respond similarly.

    Prof. Martin – this isn’t in rem, and it isn’t salvage either. Libel of pirate vessels was done to compensate the captor, not the victim and based on admiralty power over vessels brought into the jurisdiction. All of that limited the scope of the remedy/liability, and none of which is the case here.

    Prof Paust: Of course Marshall knew pirates were hostis humani generis in international law. He just didn’t think Congress had gone that far with the statute.

  9. For sure, I get the separation of powers angle. I just think that when it comes to statutes that implement international law, the better “presumption” is to construe that statute in line with the applicable jurisdictional principles of international law, so as to avoid unintended discord. If the Court had followed that approach in Palmer, it would have gotten it right the first time and Congress wouldn’t have had to pass a new statute. I think the territorial presumption makes sense when we’re talking about a purely domestic law, however. I suppose I’ll be Justice Johnson to your Justice Marshall.

  10. To bolster Prof. Kontorovich’s points, I think it should be kept in mind precisely why piracy was viewed as a sui generis wrong providing universal jurisdiction.  The reason at the time reflected  how pirates (1) rejected the sovereign protection under a flag of a nation and (2) were effectively able to evade any sovereign’s jurisdiction.  Hence, under the law of nations in the eighteenth century, if you can catch Captain Jack Sparrow, you got him for criminal and civil cases.  That is the real meaning behind hostis humani generis, and an analogy that Filartiga simply got wrong.

    Furthermore, a number of Prof. Kontorvich’s articles point out that the universality for the big international crimes we think of today weren’t clearly recognized as universal until after 1965 and the Second Restatement.  Normal principles of statutory interpretation (including the Charming Betsy canon) dictate that the jurisdictional law of the ATS should mean what it meant when it was enacted in 1789–especially for federal courts of limited jurisdiction.  It should be very rare for federal courts to simply assume that Congress expanded their jurisdiction sub silentio.

    The bridge between Profs. Colangelo and Kontorovich’s dispute over Charming Betsy is that the law can still apply “extraterritorially,” but only to U.S. nationals as defendants.  That would provide the nexus to the United States so as to not offend either traditional or modern principles of jurisdiction under international law.

  11. Response…
    Josh: there were many recognitions of universal jurisdiction before 1965.  Recall the Israeli prosecution of Eichmann (1960-61).  Israel did not even exist during the Holocaust but the Israeli S.Ct. recogn. univ. jurisd.  We did also re: the Demjanjuk extradition — a good case on univ. jurisd., quoting Rest. (Third), sec. 404, etc.

  12. Prof. Kontorovich:

    Yes, I realize that salvage and civil forfeiture cases are in rem actions.  But, piratical civil forfeiture law considers piratical vessels ”persons” (– gee whiz, just like corporations!).    And if the piratical vessel’s goods rightfully belonged to an innocent person, the salvor holds these goods in trust until and if its owner makes a successful claim for restitution under piratical salvage law. 

    Francisco Forrest Martin

  13. Prof. Paust,
     
    You’re obviously correct regarding the expansion of universal criminal jurisdiction over time. These cases still have no relationship to how piracy was actionable in any country because of pirates’ unique ability to evade most sovereign authorities in the world. See Arrest Warrant of 11 Apr. 2000 (Dem. Rep. Congo v. Belg.), 2002 I.C.J. 3, 38, 44 (Feb. 14) (separate opinion of Pres. Guillaume).

    Furthermore, this development still doesn’t mean that the First Congress had those examples of universal criminal jurisdiction in mind when they enacted the ATS for civil liability to prevent other countries having a right of reprisal against the United States.

  14. As to the ATS being civil, I don’t see why a judicially-fashioned civil remedy should be thought to have broader scope than a congressionaly-defined criminal one. I’d give Congress’s causes of action more extraterritorial wiggle room than those created by courts exercising delegated authority from Congress. I explain this distinction at much greater length in my forthcoming article,IDiscretion, Delegation and Defining in the Constitution’s Law of Nations Clause,” a rough draft of which is at http://ssrn.com/abstract=1876038

  15. Oops!  Vessels are not treated as legal persons.  Piratical vessels are treated as “offenders” under civil forfeiture law.  Sorry for the mistake.

  16. Response…
    Joshua and Eugene: the 1795 Opinion of the AG is one example of recognition that civil and criminal sanctions can be interchangeable with respect to violations of the customary laws of nations and treaties.
    Franciso: in any event you are correct that vessels can have duties under international law.  See, e.g., the cases cited in my Nonstate Actor Participation article, 51 Va. J. at 990-92 (e.g., with respect to the slave trade, piracy, and breaches of neutrality — the latter being the focus of the 1795 Op. A.G. re: breaches by private U.S. citizens in Africa).

  17. Prof. Paust,
     
    Again, I believe we’ve come full circle to Attorney General Bradford’s opinion.  As we discussed earlier, I’m not so sure that General Bradford’s “beyond … doubt” language was referring to the law of nations provision of the ATS, or merely its treaty provision and the (very) recently ratified Jay Treaty.  Even if your interpretation is 100% correct, though, that still wouldn’t mean that the ATS supplies jurisdiction for foreign-cubed law-of-nations cases given that General Bradford was addressing the “wrongful” assistance by Americans of French plundering in or around British Sierra Leone.

  18. Response…
    Joshua: but in any event and quite importantly it was recognized that the Act applies to conduct abroad.  I read the 1795 Opinion’s phrase “and against the public peace” to include the customary crime of breach of neutrality, especially since the Opinion went on to address President Washington’s warning that citizens should “render themselves liable to punishment under the laws of nations, by committing, aiding or abetting hostilities” and, similarly also, those who “violate the laws of nations.”  This is especially appropriate in view of Henield’s Case in 1793 (which famously recognized that persons could be prosecuted for violations of the law of nations as well as treaties of the U.S. when they engaged in breaches of neutrality because although there was no relevant statute for prosecuiton, the “laws of the United States” include both types of international law), and two later Opinions of the AG in 1796 and 1797 addressing santions for breaches of neutrality under the “law of naitons.”

  19. On the Guatemalan digression that is supposed to be not relevant to the ATS discussion but speaks to the incentive systems, the views of the former leftist government official would not appear to  me to be the relevant ones.  Those views would be like the views of the former leftist government official in Nigeria about the Kiobel v Shell stuff.

    And the point is not whether the Western or Asian companies are more or less human rights compliant.  And how some person in the Western company thinks about itself would not be the most relevant point of view in my opinion.

    The most relevant point of view I should think was that of the person who alleges they were the victim of the human rights violations perpetrated by the corporation – what we use to call the victim.  If that person feels the need to seek justice on their own behalf and on that of others – making the calculus associated with that – and brings forward the evidence, then some access to meaningful process would seem important to provide.  If the state in which they are in does not provide access to meaningful process people look to other places.

    Universal  jurisdiction or protective jurisdiction provide a jurisdictional precedent for the hearing of the complaint of that person in a foreign court – if said court is willing to exercise the plenitude of that jurisdiction to reach behavior that might be also within the jurisdiction to adjudicate of another state.

    The consequences of the hearing of the case and the adjudication of the human rights complaint are possibly to vindicate the  claim of the injured party – something I would think was not a bad thing – and incur costs for the corporate offender who operates through persons doing the corporate bidding. 

    States and Corporations are human constructs and, as humans do wrong, so can states and corporations do wrong.  States and corporations have an interest in denying horrendous acts were official policy because 1) the people perpetrating those acts do not want to risk liability for those acts as a private matter and 2) this seeks to avoid the burden of compensation on the state as a public matter or corporation coherent with its profit maximizing task.

    Watching all the debates on the ATS space, I have this distinct feeling that there is an enormous effort being put forth here to make the problem of the ATS more complex than it need be simply because in the Kiobel case there are powerful entities which are facing the risk of liability for actions done in their name.  Those entities are able to marshall governments and lawyers (money is no object) as instruments to limit their exposure in a given case in their risk minimizing strategies.

    I salute the lawyers who are attempting to create arguments and hurdles in zealous defense of their corporate clients or in the hope of currying favor with future potential corporate clients for doing what they do so well. 

    If you were asked to swim  a river of manure, not only would you do it but you would compete at it.

    I really salute the lawyers who are attempting to have addressed the claims of the injured parties in these settings – in a world where so much is stacked against ordinary people being able to vindicate claims against corporate behemoths through the instrumentalization of law by the genius lawyers. 

    We are in a world where the ultimate concern is whether injury to the corporation will diminish the value of one’s 401k as if the manner in which revenue and profits are achieved was irrelevant.

    Sometimes people say “enough” and seek justice.  Whether our Supreme Court is capable of doing more than word manipulation to not address the substance of the complaint but to seek to find some doctrine to interpose to block redress is something we shall see in this case. 

    I, for one, tire of intelligent Supreme Court justices and their clerks who think that the manipulations they do (in focusing on this or that point to the exclusion of the underlying injury) have any meaning.  Especially when they seem to make such a hash of international law whether through their fault or the combined ignorance of themselves and the lawyers who argue the cases – the fault of we professors of international law.

    Best,
    Ben 

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