The US Supreme Court decision in Kiobel v Royal Dutch Petroleum limits the application of the US Alien Tort Statute and reduces the scope for non-state parties to bring disputes in the US founded in international law. The decision runs counter to recent global trends in international law. These have provided greater opportunities for non-state entities to bring proceedings under international law and also to hold international businesses to account by permitting human rights claims to be brought by non-nationals concerning claims arising outside the jurisdiction.
On April 17, 2013, the US Supreme Court issued its opinion in Kiobel v Royal Dutch Petroleum No. 10-1491 on whether and under what circumstances the US Alien Tort Statute (ATS) allows courts to address violations of “the law of nations” occurring outside the US. The ATS, adopted as part of the Judiciary Act 1789, grants jurisdiction to US federal courts to hear tort claims by aliens alleging violations of the law of nations (also known as customary international law).
Over the last three decades, the ATS has served as a tool to bring international human rights claims against transnational corporations for their business activities abroad. However, the Supreme Court in Kiobel held unanimously that the petitioners’ claims fell outside the jurisdiction of the ATS, because the ATS does not apply extraterritorially where claims do not “touch and concern” the US with “sufficient force”.
The ruling has received a great deal of attention around the world, most notably because of an increased global focus on the need for businesses to respect human rights in line with the UN Guiding Principles on Business and Human Rights. The unavoidable impact of Kiobel will be to limit the ATS as a vehicle of redress for victims of business-related human rights harms.
The decision is also of significance for international lawyers, as it runs contrary to the increasing availability of forums for non-state parties to bring disputes in international law, most clearly evidenced by the numerous bilateral and multilateral investment treaties which have developed since the middle of the last century.
Questions unanswered by the US Supreme Court
The Kiobel decision leaves a number of questions unanswered. First, it is not clear from the opinion what degree of connection is required to rebut the presumption against extraterritoriality.
It was held that ATS claims must “touch and concern” the US with “sufficient force” to rebut the presumption against extraterritoriality; however, what this means in practice remains unanswered. In light of the Court’s decision in Sosa v Alvarez-Machain 542 U.S. 692 (2004), one cannot assume that any domestic conduct will be sufficient to rebut the presumption. According to Justice Alito in Kiobel, an ATS claim will be barred “unless the domestic conduct is sufficient to violate an international law norm that satisfies Sosa’s requirements of definiteness and acceptance among civilized nations.”
Second, the Kiobel decision does not address the issue of whether the law of nations recognizes corporate liability. The Justices unanimously agreed that “mere corporate presence” in the US was not a strong enough connection. Arguably, this still leaves open the possibility of bringing claims against transnational corporations under the ATS.
The broader impact
The effect of the Supreme Court’s decision has already been felt in several high-profile ATS proceedings. On June 28, 2013, the US Ninth Circuit Court of Appeals dismissed a claim brought against Rio Tinto by an indigenous group in Papua New Guinea for allegations of abetting abuses committed by the armed forces of that country.
Claimants have also taken notice of the decision, and a number of high-profile ATS claims with little or no connection to the US have been voluntarily dropped following the judgment. One prominent example of such a recently discontinued dispute is Turkcell’s action against MTN for more than US$4 billion, an action based on claims about the South African company’s activities in Iran.
On the same day as Kiobel, the Supreme Court agreed to hear another ATS case, DaimlerChrysler Corp. v Bauman, which relates to allegations of human rights abuses committed by the German company’s Argentine subsidiary. The Justices will determine whether it violates due process for a court to exercise jurisdiction over a foreign corporation on the basis that an indirect corporate subsidiary performs services on behalf of the defendant in the forum state. More broadly, it is expected that the Supreme Court will take this opportunity to elucidate on the circumstances needed in order to satisfy the “US connection” requirement established in Kiobel. Arguments were heard on October 15, 2013.
Irrespective of how widely the Justices interpret this concept in Bauman, Kiobel has effectively eliminated the ATS as a potential means of enforcing international law for claimants who cannot establish a sufficient nexus with the US based on the facts of their case.
The presumption against extraterritoriality is not limited to the ATS; the decision will be of broader application to claims under other statutes. From an investment law perspective, it is not clear whether Kiobel will affect the application of section 1605(a)(3) of the 1976 Foreign Sovereign Immunities Act (FSIA), another statute which envisages international law claims before the US courts. The FSIA allows expropriation claims to be brought against sovereign states if certain criteria are met. However, unlike the ATS, the text of the FSIA explicitly requires there to be some connection between the facts in dispute and the US.
On the face of it, the Kiobel decision appears to run counter to two recent global trends.
The first is the increased availability of forums for non-state parties to commence proceedings in international law. This has arisen over the last 50 years following the ratification of a plethora of bilateral and multilateral treaties which commonly allow investors from one state to commence arbitration proceedings against another state, often through an institution such as the International Centre for Settlement of Investment Disputes (ICSID).
Secondly, over the last 20 years there has been an increased focus on the responsibility of businesses to respect human rights, particularly since the UN Human Rights Council unanimously endorsed the UN Guiding Principles on Business and Human Rights, formulated by Professor John Ruggie, the former Special Representative of the UN Secretary General for Business and Human Rights. During the Kiobel proceedings, Professor Ruggie submitted an amicus curiae brief (that of an impartial adviser to a court of law), acknowledging the ATS as one remedial avenue available “to those alleging business related human rights harms”. Against this political context, courts in other jurisdictions have been accepting claims by non-nationals in relation to human rights abuses committed outside the jurisdiction of the forum, most recently in Canada.