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Supreme Court To Decide If 1789 Law Applies To Shell Today

Daniel Fisher

Daniel Fisher, Forbes Staff


For nearly 200 years, the Alien Tort Claims Act lay dormant, a one-sentence law passed by the first Congress that gave federal courts jurisdiction to hear any lawsuit brought by “an alien” for torts committed “in violation of the law of nations.” Then around 1980 inventive lawyers rediscovered it as a tool for international human-rights enforcement. One judge dubbed the long-neglected law a “legal Lohengrin,” after the knight in the Richard Wagner opera who magically appears in a boat drawn by a swan.

Early next year the Supreme Court will decide whether this law can be the legal vehicle for pressing multibillion-d0llar claims against corporations that lawyers believe are responsible for human-rights violations. One case, Kiobel v. Royal Dutch Petroleum, asks whether Nigerian villagers can sue the oil giant in U.S. court over the actions of government troops they say were acting on Shell’s orders to protect its valuable installations in Nigeria. It is paired with another case involving the 1993 Torture Victims Protection Act. In both, the court is being asked to sort out a dispute among the federal districts about whether these laws apply to individuals only, or can be extended to organizations like Shell and the Palestinian Liberation Organization.

The stakes are huge for corporations, which theoretically could be held liable for any actions of the government in nations where they do business, pay taxes, and rely on local forces to protect their assets.

“There have been plenty of cases where the theory is, basically, the corporation has aided and abetted the human rights violations just by doing business with the violators,” said Meir Feder, an appellate lawyer in Jones Day’s New York office who is active in international corporate law. “It’s been a real growth industry.”

Lawyers really embraced the 1789 law after the U.S. Supreme Court decided  in 2004 that a Mexican national could not use the ATS to sue the Mexican agent who abducted him on instructions of U.S. officials. It was a defeat for the plaintiff in that case, but the high court flashed “an ambiguous green light” to other lawsuits by suggesting the ATC could be used to allege torts that didn’t exist when it was written in 1789.

The main question before the court when it hears the Shell and Torture Protection cases, probably in February, will be whether the laws can be applied to organizations instead of individuals. The Second Circuit Court of Appeals in New York rejected the Shell case in December 2010, saying “corporate liability is not a discernable—much less universally recognized—norm of customary international law.”

The decision offers a lengthy diversion into 18th century law and politics, when pirates were a major foreign-policy concern and large parts of the world had no formal government at all. The majority concluded that while enforcing human rights was the “singular achievement” of international law after World War II, it has never been stretched to include lawsuits against corporations. The ATC applies to the actions of states and individuals,the court ruled, since ultimately only people in a position of governmental authority can bear moral responsibility for acts so heinous they rise to the level of “international crime.”

Even the ever-sympathetic Ninth Circuit signed off on this view,deciding in 2010 that Chevron couldn’t be sued under the ATS for the actions of Nigerian security forces when they retook an offshore oil platform that had been occupied by protesters.

But the 11th Circuit ruled the other way in 2008 in a lawsuit by Colombian villagers allegedly abused by paramiliaries in the employ of a U.S. corporation. And in July of this year the influential D.C. Circuit ruled that ExxonMobil could be sued for allegedly allowing government security forces detailed to its facility in Aceh, Indonesia to commit murder, sexual assault and other crimes against villagers.

The court rejected ExxonMobil’s argument that the Supreme Court had eliminated aiding and abetting liability in its pivotal Central Bank case in 1994. It still applied in the world of international crimes, the court held. None less than George Washington had issued a proclamation in 1793 warning U.S. citizens they’d be found liable for “aiding, or abetting hostilities” against any power involved in fighting in Europe.

Judge Brett Kavanaugh, a conservative favorite, issued a strongly worded dissent.  The ATC was intended to “avoid conflicts with foreign governments” by providing redress to aliens who suffered injuries within the U.S. Extending it to actions on foreign soil creates rather than avoids conflicts, and itself conflicts with the Torture Prevention Act which only protects U.S. citizens. If the ATS works the way the majority would have it, he wrote, then an alien could bring a lawsuit against a corporation in U.S. court that was barred by a U.S. citizen.

The Torture Victims Statute case seems a simpler proposition, since the law gives the right to sue to “any individual” who under “actual or apparent authority” of government authority tortures another individual. Congress considered, and rejected, using the word “person” which is understood to include corporations and other organizations, said Feder, who not surprisingly represents corporate clients who say they are not “individuals.”

“I don’t have a problem predicting it is quite likely the Supreme Court is going to say corporations are not subject to suit,” he said.

The Roberts Court is also likely to trim the sails of plaintiff lawyers who want to use the 1789 Alien Tort Claims Act to pursue 21st-century class actions, Feder said.

“At the end of the day, the current Supreme Court is likely to take a much more restrictive view of what kind of cases will be allowed to go forward than a lot of lower courts have allowed,” he said. The ATC was designed for situations where aliens had no way to get redress and failing to deal with their complaints would lead to “serious military and diplomatic problems,” Feder said.

“The current Supreme Court is going to look at that and say `We’re not going to extend that as a sort of general right of action for human rights violations all over the world.’”

ExxonMobil, Chevron, Shell and other corporations doing business in dangerous parts of the world will certainly be pulling for the legal Lohengrin to disappear into the mists again.


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