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Companies Shielded as U.S. Court Cuts Human-Rights Suits

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By Greg Stohr on April 17, 2013

The U.S. Supreme Court insulated multinational corporations from at least some lawsuits over atrocities abroad, scaling back a favorite legal tool of human rights activists.

The justices threw out a suit accusing two foreign-based units of Royal Dutch Shell Plc (RDSA) of facilitating torture and execution in Nigeria. The majority said the 1789 Alien Tort Statute generally doesn’t apply to conduct beyond U.S. borders.

In the Shell case, “all the relevant conduct took place outside the United States,” Chief Justice John Roberts wrote for the court. The justices were unanimous on the outcome in the Shell case, while dividing in their reasoning.

The ruling may help a number of companies defeat similar lawsuits. Exxon Mobil Corp. (XOM), Cisco Systems Inc. (CSCO), Chiquita Brands International Inc. (CQB), Siemens AG, Daimler AG and Rio Tinto Group (RIO) are all fighting Alien Tort Statute claims.

Without specifically addressing those cases, Roberts said a company couldn’t be sued under the Alien Tort Statute simply because it had a “corporate presence” in the U.S.

Roberts pointed to the “presumption against extraterritoriality,” saying that legal principle limits the reach of the Alien Tort Statute. The court’s four Democratic appointees — Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan — wrote separately to say they would have reached the same result using different reasoning.

Kennedy Opinion

Three other justices — Anthony Kennedy, Samuel Alito and Clarence Thomas — said in separate opinions that the ruling was a narrow one. Kennedy said the court “is careful to leave open a number of significant questions.”

Human-rights advocates said before the Supreme Court decision that a ruling favoring Shell would undermine the ability of atrocity victims to hold their perpetrators accountable. Alleged victims have invoked the law more than 150 times in the past 20 years.

“A majority of our highest court has chosen to make it easier for big corporations complicit in human rights abuses to evade responsibility and vastly more difficult for their victims to get justice,” said Nan Aron, president of the Washington- based Alliance for Justice, in an e-mailed statement.

The suit before the high court was pressed by Nigerians who said two Shell units were complicit in torture and execution in the country’s Ogoni region from 1992 to 1995.

Two Arguments

The justices heard arguments twice in the case, first in their 2010-11 term on contentions that the Alien Tort Statute doesn’t permit suits against corporations.

The court then expanded its review, ordering re-argument in October on a potentially more sweeping question: whether the statute applies beyond the U.S. borders.

The court’s decision to focus on that question means its ruling may apply to corporate officers as well as the companies.

The 33-word statute, enacted in 1789, was in part a reaction to an attack on a French diplomat in Philadelphia. The Alien Tort Statute then lay largely dormant for almost two centuries before being revived in the 1970s as a means of pressing human-rights lawsuits.

The pending Alien Tort Statute cases against other companies allege wrongdoing around the globe. Exxon is fighting claims that the company was complicit in murder, torture and sexual assault in Indonesia’s Aceh province. Chiquita is battling allegations that it financed paramilitary death squads in Colombia.

Daimler’s Argentine Mercedes Benz unit is accused of collaborating with state security forces to kill and torture workers, while Siemens allegedly arranged the beating of a man who uncovered corruption in an Argentine government contract.

A lawsuit against Cisco contends the company aided human rights abuses in China by helping government officials access private Internet communications and identify anonymous bloggers.

The Supreme Court case is Kiobel v. Shell Petroleum, 10-1491.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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