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Monday, February 4, 2013

Kiobel v. Royal Dutch Petroleum Co.: Corporate Liability and Extraterritoriality Under the Alien Tort Statute

Richard M. Thompson II
Legislative Attorney

The First Congress enacted the Alien Tort Statute (ATS) against a backdrop of concern about the ability of the United States to carry out its international obligations. Now codified at 28 U.S.C. § 1350, the ATS grants federal district courts jurisdiction over “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” The meaning of this terse provision has confounded judges and scholars for over 200 years, and has prompted three seemingly simple, yet elusive questions: what conduct comes within its ambit; who may be held liable; and where does it apply?

These questions are the focal point of Kiobel v. Royal Dutch Petroleum Co., a case pending before the United States Supreme Court. There, a group of Nigerians sued two foreign oil corporations, the Royal Dutch Petroleum Company (Royal Dutch) and the Shell Petroleum Development Company of Nigeria, Ltd. (Shell), for allegedly aiding and abetting the Nigerian government in committing widespread human rights abuses against Nigerian residents. The U.S. Court of Appeals for the Second Circuit was asked whether corporations could be held accountable for human rights violations under the ATS, a question long fermenting in the federal courts. The court ruled that there was not a sufficient norm of customary international law that would permit such liability. The Seventh, Ninth, Eleventh, and District of Columbia Courts of Appeals have each reached the opposite conclusion, although each with differing rationales.

In 2011, the Supreme Court granted the Nigerian plaintiffs’ request for review on this question of corporate liability. At oral argument on February 28, 2011, the Justices’ questions went beyond mere corporate liability to a more fundamental question: whether the ATS could ever be applied extraterritorially to cover acts committed by a foreign defendant against a foreign plaintiff on foreign soil. The parties re-briefed the Court on this issue, and oral arguments were held on October 1, 2012.

The outcome of the Supreme Court’s ruling in Kiobel on both the issue of corporate liability and the extraterritorial application of the ATS will have many significant consequences for corporate strategy, human rights litigation, and U.S. foreign policy. Sensing the potential importance of this upcoming decision, some of the largest U.S. corporations filed briefs in support of the corporate defendants. Likewise, human rights groups and plaintiffs’ lawyers have submitted briefs backing the Nigerian plaintiffs. The Department of Justice has also weighed in due to its concern with the foreign policy impact of suing foreign entities in U.S. courts for acts committed in the territory of a sovereign nation.

Whatever the outcome, Congress could clarify the scope and content of the ATS⎯including whether it covers corporations and whether it applies extraterritorially.

Date of Report: January 17, 2013
Number of Pages: 20
Order Number: R42925
Price: $29.95

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