September 17, 2010
Corporations and the Alien Tort Claims Act
Posted by Gordon Smith

The United States Court of Appeals for the Second Circuit just issued its opinion in Kiobel v. Royal Dutch Petroleum, a case involving claims under the Alien Tort Statute for human rights abuses in Nigeria. More specifically, the plaintiffs allege that Royal Dutch and Shell aided and abetted "Nigerian military forces [that] shot and killed Ogoni residents and attacked Ogoni villages — beating, raping, and arresting residents and destroying or looting property." The companies allegedly provided transportation, staging areas, food, and compensation to the Nigerian soldiers. The issue in the case is fundamental: "Does the jurisdiction granted by the [Alien Tort Statute] extend to civil actions brought against corporations under the law of nations?"

The court's answer: No.

The court's rationale: the subject-matter jurisdiction of the Alien Tort Statute is defined by customary international law, and "from the beginning ... the principle of individual liability for violations of international law has been limited to natural persons — not 'juridical' persons such as corporations — because the moral responsibility for a crime so heinous and unbounded as to rise to the level of an 'international crime' has rested solely with the individual men and women who have perpetrated it."

While both the majority and the concurrence in Kiobel recognize a norm of aiding and abetting liability under the Alien Tort Statute, the majority relies heavily on the notion that "no international tribunal has ever held a corporation liable for a violation of the law of nations." Judge Leval observes in a concurring opinion that no tribunal has ever held that a corporation could not be liable for a violation of the law of nations. 

The majority counters this argument in Parts II and III of the Discussion, arguing that customary international law is not established by the logical extension of existing norms, but only by actual practices. As for actual practices, the court leans heavily on the absence of cases imposing criminal liability on corporations as evidence that "corporate liability has [not] attained universal acceptance as a rule of customary international law." While the concurrence questions this approach, the majority offers substantial support for its analysis. 

In the end, the concurrence offers an impassioned argument for corporate liability and wins convincingly in the battle of quotability, but the majority's opinion is more firmly grounded in analysis of authority. Julian Ku observes, "there appears to be no serious argument left that customary international law can impose duties on private corporations."

I suspect that the majority opinion will not put an end to serious argument, but you can judge for yourself.

Corporate Governance, Corporate Law, Crime and Criminal Law, Globalization/Trade, Social Responsibility | Bookmark

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