Alien Torts Statute Only Applies to Individuals, Not Corporations, 2nd Circuit Rules

Last week, a three-judge panel of the 2nd Circuit US Court of Appeals ruled that liability under the Alien Torts Claims Act does not apply to corporations. Right now, only federal courts in the 2nd Circuit must abide by the ruling. But should the case, Kiobel vs. Royal Dutch Petroleum, eventually be upheld by the US Supreme Court, it will be impossible for plaintiffs to file lawsuits in the US against corporations that have violated international human rights laws overseas. However, the ruling still allows for such claims against individuals, which means corporate officers, employees and even shareholders could find themselves in the crosshairs when victims of such crimes seek justice in US Courts.

The Alien Torts Claims Act of 1789 provides that the US federal trial courts “shall have original jurisdiction of 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 law wasn’t used much until the 1980s, when the 2nd Circuit Court of Appeals decided the case of Filartiga v. Pena-Irala, giving alien victims of serious violations of international law the right to seek civil damages in a US federal court against foreign officials. Since then, various other US courts have allowed foreign plaintiffs to bring cases in the US, and many lower courts have assumed that there can be corporate liability under the statute.

Kiobel vs. Royal Dutch Petroleum was brought by Nigerian citizens who claimed that Dutch, British and Nigerian corporations should be held liable for human rights violations committed by the Nigerian military with the companies’ assistance. The human rights violations cited by the complaint included attacks on people in the Ogoni region who were protesting the environmental effects of oil exploration in the area. In addition to Royal Dutch Petroleum, the lawsuit named Shell Transport and Trading Company PLC; and Shell Petroleum Development Company of Nigeria, LTD as defendants.

According to a report on Law.com, in a 2-1 decision, a three-judge panel of the 2nd US Circuit Court of Appeals rejected the theory that corporations can be held liable in the US under the Alien Torts statute, ruling that the statute only gives US courts jurisdiction over alleged violations of international law committed by individuals.

“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,” the majority opinion states.

The majority affirmed the dismissal of several claims by Southern District of New York Judge Kimba Wood, but also said that the remaining claims, including aiding and abetting crimes against humanity, should be thrown out as well, Law.com said.

Corporations have long been trying to escape liability under the Alien Torts statute, so on one hand, this ruling may seem like a victory. Corporations named in such lawsuits will likely start moving courts to dimss them.

But could it become a Pyrrhic victory for corporations? It’s possible since the ruling also notes that “nothing in this opinion limits or forecloses suits under the ATS against the individual perpetrators of violations of customary international law — including the employees, managers, officer, and directors of a corporation — as well as anyone who purposefully aids and abets a violation of customary international law.” While corporations could be off the hook, the Alien Torts statute can still be used to hold their officers, directors, shareholders and employees accountable for violating human rights overseas.

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