U.S. Supreme Court Limits Corporate Liability for Human Rights Abuses

Arab Bank, the defendant in Jesner v. Arab Bank
Credit: jo.schz via Flickr

On April 24, the United States Supreme Court ruled in Jesner v. Arab Bank that foreign citizens cannot sue foreign corporations for civil damages in U.S. federal courts for serious violations of international law, such as torture or extrajudicial killings. See Jesner et al. v. Arab Bank, PLC, No. 16–499, slip op. (April 24, 2018). The case was brought against Arab Bank by victims of several terrorist attacks occurring in Israel and the occupied territories. See id. at 1. The plaintiffs alleged that Arab Bank supported numerous terrorist attacks, including those that harmed the victims, by knowingly providing financial services to terrorists, such as accepting deposits it knew were donations used to fund the attacks and pay money to the families of suicide bombers. See id. at 1-3. The plaintiffs brought their case under the Alien Tort Statute (ATS), which provides that United States federal courts may hear cases, brought by non-nationals, of tort committed in violation of international law. See id. at 1-2. The ATS is an exercise in universal civil jurisdiction, as it extends domestic judicial jurisdiction over actions that occurred abroad to foreign plaintiffs; it has historically been a means for non-U.S. citizens to seek redress for serious human rights violations committed outside of the U.S., although the Jesner decision and previous rulings limit the scope of the statute. See, e.g., Jesner, No. 16–499, slip op. at 1; Filártiga v. Peña-Irala, 630 F.2d 876 (2d Cir. 1980). Notably, the Supreme Court’s 2013 decision in Kiobel v. Royal Dutch Petroleum limited the scope of the ATS to cases that touch and concern the United States with sufficient force to overcome a presumption against the U.S. extending jurisdiction extraterritorially. See Kiobel et al. v. Royal Dutch Petroleum et al., 569 U.S. 108 (2013); Sosa v. Alvarez-Machain, 542 U.S. 692 (2004). International human rights bodies disagree over whether States must exercise universal civil jurisdiction over specific human rights abuses, mainly torture, that occurred abroad and by a foreign defendant. [IJRCSee Naït-Liman v. Switzerland [GC], Judgment of 15 March 2018; CAT, General Comment No. 3 (2012), UN Doc. CAT/C/GC/3, 13 Dec. 2012, paras. 22, 26.

Case Background

The plaintiffs in this case are all foreign nationals who were themselves victims or family members of victims of terrorist attacks that occurred in the Middle East over the course of a ten-year period. See Jesner, No. 16–499, slip op. at 3. In the Federal Court for the Eastern District of New York, the plaintiffs sought damages from Arab Bank, a Jordanian financial institution, which the plaintiffs alleged helped finance attacks by Hamas and other terrorist groups. See id. Specifically, the plaintiffs alleged that Arab Bank knowingly maintained accounts for terrorists and terrorist organizations, and that Arab Bank would allow the groups to use these accounts to pay family members of suicide bombers. See id. The trial court dismissed the plaintiffs’ claim on the grounds that the ATS could not be used to sue foreign corporations, and the appellate court affirmed the dismissal. See id. at 5. The plaintiffs filed for, and were granted, appeal to the Supreme Court on the issue of whether the ATS creates corporate liability for torts committed in violation of international law. See id. at 1-2, 4-5.

The Plurality’s Opinion

The Supreme Court held that the ATS does not allow for a suit against a foreign corporation, regardless of where the tort occurred, to be brought by foreign nationals. See Jesner, No. 16–499, slip op. at 27. In other words, the Court held that the ATS can at most apply to natural persons and United States corporations. The Court reached the decision with five judges, two of whom wrote concurring opinions, agreeing with the holding and four dissenting. See id. at 1, 27.

The plurality opinion, issued for the three of the five justices who did not write concurring opinions – Justice Kennedy, Justice Thomas, and Chief Justice Roberts – found that separation of powers and the potential impact on U.S. corporations supported the holding that foreign companies should be excluded from liability under the ATS. The Court found that creating a cause of action against foreign corporate defendants would impinge on the authority of the other two branches of governments. See id. at 19. Additionally, in the absence of an international consensus concerning whether international law recognizes universal corporate liability, the Court considered the foreign policy impact of a ruling in favor of corporate liability. See id. at 19-21. The Court found that allowing foreign corporate liability would provide grounds for other countries to hold U.S. corporations liable in their domestic courts. See id. at 24. The Court reasoned that this would have a considerable detrimental impact on foreign investment and international relations, when, in fact, it was the purpose of the ATS to create a forum to resolve disputes that were likely to create international tensions. See id. at 24-25. Therefore, the Court found that the U.S. Congress should determine the liability of foreign corporations in U.S. courts, not the judiciary, as Congress has “the facilities necessary” to make policy decisions that involve international relations, which the Court noted suffered due to this litigation. See id. at 25-29.

The Concurring Opinions

Justice Alito and Justice Gorsuch each wrote separately, both concurring in the judgment, but providing different reasoning for the outcome. Justice Alito wrote separately to emphasize that the principle of separation of powers required limiting corporate liability under the ATS. See id. at 1 (Alito, J., concurring). Justice Alito contended that extending the ATS to include corporate liability would amount to a policy, infringing on the other two branches of government. See id. at 6-7 (Alito, J., concurring).

Justice Gorsuch, in his concurrence, contends that the U.S. Supreme Court should not read-in any cause of action into statutes such as the ATS. See id. at 3-5 (Gorsuch, J., concurring). Justice Gorsuch questioned the Court’s earlier rulings, which held that the ATS may allow federal judges to consider creating new causes of action under the ATS if the cause of action is based in a clearly defined norm of customary international law. See id. at 2-3 (Gorsuch, J., concurring). Additionally, Justice Gorsuch proposed that the ATS should be read to apply only to U.S. defendants, precluding both foreign corporations and foreign individuals as defendants. See id. at 5-13 (Gorsuch, J., concurring).

The Dissenting Opinion

The dissenting opinion, written by Justice Sotomayor and joined by Justice Ginsburg, Justice Breyer, and Justice Kagan, explained that the principle of universal civil jurisdiction need not be a principle of customary international law for the ATS to impose liability on corporations, and instead, the Court should look to the specific tort in question to determine whether a corporation can be a defendant of that tort under international law. See id. at 5-12 (Sotomayor, J., dissenting). Because there is nothing about the corporate form that distinguishes it from individuals as a matter of foreign policy, the dissenters believe that the ATS should also apply to corporations. See id.

Universal Civil Jurisdiction under International Law

Universal civil jurisdiction is the power of a domestic court to resolve claims for monetary compensation without there being any connection between the State where the case is brought and the underlying facts of the case. See ECtHR, Naït-Liman v. Switzerland [GC], no. 51357/07, ECHR 2018, Judgment of 15 March 2018, paras. 97, 177. Very few countries in the world provide for some form of universal civil jurisdiction under their domestic law, and when they do, jurisdiction is often subject to subject-matter limitations. For example, the Netherlands provides for universal civil jurisdiction, but only in limited cases such as for cases of torture. See Akpan/Royal Dutch Shell, Rechtbank Den Haag [Rb.] [District Court of The Hague], The Hague, 30 January 2013, LJN BY9854, (Neth.); Naït-Liman v. Switzerland [GC], Judgment of 15 March 2018, para. 69. Canada also provides for a form of universal civil jurisdiction, but only for cases concerning terrorism and where either the victim is Canadian or the case has some connection with Canada. See Justice for Victims of Terrorism Act, 2012 S.C., ch. 1 (Can.).

United States’ International Legal Obligations

The United States is a party to several international human rights treaties and has international human rights obligations under those treaties. The Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (Convention against Torture), which the U.S. is a party to, requires in Article 14 that States parties to the Convention “ensure in [the State’s domestic] legal system that the victim of an act of torture obtains redress and has an enforceable right to fair and adequate compensation.” While the Committee against Torture, the monitoring body of the Convention against Torture, has interpreted Article 14 to apply to cases in which the torture occurred outside of the State’s territory and by officials of a foreign State, the European Court of Human Rights recently came to a different conclusion based on the Committee’s merits decisions. [IJRC] See Naït-Liman v. Switzerland [GC], Judgment of 15 March 2018; CAT, General Comment No. 3 (2012), UN Doc. CAT/C/GC/3, 13 Dec. 2012, paras. 22, 26.

The United States is also a State party to the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD); the International Covenant on Civil and Political Rights (ICCPR); and the Optional Protocols to the Convention on the Rights of the Child on the sale of children, child prostitution and child pornography and on the involvement of children in armed conflictSee OHCHR, Ratification Status for United States of America.

Additional Information

For more information about universal jurisdiction, the Committee against Torture, and the right to freedom from torture, visit IJRC’s Online Resource Hub. To stay up-to-date on international human rights law news, visit IJRC’s News Room or subscribe to the IJRC Daily.