On April 17, 2013, in Kiobel v. Royal Dutch Shell Petroleum Co. (Kiobel), the United States Supreme Court ruled against the extraterritorial application of the Alien Tort Statute (ATS), originally adopted in 1789.
Claims such as that brought in Kiobel, where plaintiffs attempt to hold extractive companies liable extraterritorially for their actions and the actions of related companies for alleged human rights and environmental violations, are becoming a common occurrence internationally. Courts throughout Europe and North America are being asked to make judgments regarding the activities of companies and their related entities abroad.
In Kiobel, Chief Justice Roberts delivered the reasons of the Court, which were joined in by Justices Scalia, Kennedy, Thomas, and Alito. Justices Breyer, Ginsburg, Sotomayor and Kagan concurred with the result, but differed significantly in their view of the scope of the ATS.
The majority held that the presumption against the extraterritorial application of domestic legislation applies to the ATS and the statute’s language and context do not rebut this proposition. Therefore, the ATS does not generally apply to actions outside the United States by parties who are not US nationals.
The Petitioners, Nigerian residents, claimed that Shell’s Dutch, British and Nigerian corporations that were engaged in oil exploration and production in the Ogoni region of Nigeria aided and abetted the Nigerian government in human rights violations including crimes against humanity, extrajudicial killing, and torture of protestors who objected to Shell’s presence in the region. The Plaintiffs alleged jurisdiction under the ATS and requested relief under customary international law.
The ATS provides that “[t]he district 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.” Before 1980, when it was given new life in Filartiga v. Peña-Irala, the ATS had not been used for over 170 years because it had been thought to only apply to three narrow classes of torts: violations of safe conducts, infringements of ambassadors’ rights and piracy. In Filartiga and subsequent cases, the court held that the ATS applies to a modest number of claims that can be defined with specificity, based on the current law of nations.
On appeal, the majority of the Second Circuit Court of Appeals held that the ATS cannot be used against corporations because corporate liability is not a norm of customary international law.
The US Supreme Court heard the appeal on the issue of whether the ATS applies to corporations or only to natural persons (the corporate liability issue) on February 28, 2012. On March 6, 2012, the Supreme Court requested supplemental briefs regarding whether and under what circumstances the ATS applies to torts committed in other sovereign states (the extraterritoriality issue). The second hearing to address the extraterritoriality issue took place on October 1, 2012.
US Supreme Court Limits the Scope of the ATS
Though the Court was unanimous in finding that the ATS was not applicable to the facts in Kiobel, the Court split 5-4 over the scope of the ATS. The Chief Justice, writing for the majority, relied on the presumption against extraterritorial application of domestic legislation to dismiss the action. Citing the Court’s decision in Morrison v. National Australia Bank Ltd, he held that the texts, history and purposes of the ATS do not show the “clear indication of extraterritoriality” that is required to rebut the presumption. He stated that "even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption" but provided no guidance as to how strong the connection would need to be to the United States to trigger the ATS.
The majority’s reasons illustrate the Court’s hesitancy to “impose the sovereign will of the United States onto conduct occurring within the territorial jurisdiction of another sovereign”. Within the majority’s reasons, the Chief Justice cited the potential direct foreign policy consequences that may arise and the potential impingement on the discretion of the Legislative and Executive branches of government as reasons to use caution in applying the ATS. The Chief Justice stated that “there is no indication that the ATS was passed to make the United States a uniquely hospitable forum for the enforcement of international norms”. The mere corporate presence within the United States is insufficient to trigger the ATS because all of the relevant conduct took place outside the United States. Therefore, the Petitioners’ appeal was dismissed.
The remaining four justices concurred with the majority’s conclusion but not with its reasoning. Justice Breyer's reasons provide more guidance as to when the ATS would apply than the majority’s reasons. He would allow the ATS to apply to a wider range of circumstances than the majority, namely “where (1) the alleged tort occurs on American soil, (2) the defendant is an American national, or (3) the defendant’s conduct substantially and adversely affects an important American national interest, and that includes a distinct interest in preventing the United States from becoming a safe harbor (free of civil as well as criminal liability) for a torturer or other common enemy of mankind”.
Neither of the opinions made any reference to the corporate liability issue, the original issue on appeal.
International Liability of Extractive Companies
As earlier stated, Kiobel does not stand alone as the only claim brought in a jurisdiction other than where the alleged human rights violations occurred to hold extractive companies liable extraterritorially for their actions and the actions of related companies.
Not all jurisdictions have declined jurisdiction of extraterritorial claims against corporations. In January 2013, the district court in The Hague announced that Shell Petroleum Development Company of Nigeria Ltd. (Shell Nigeria), a wholly-owned subsidiary of Royal Dutch Shell plc, was liable for negligence in Nigeria which led to two oil spills in 2006 and 2007. The only connection that the claims had to The Hague was that Shell Nigeria’s parent company (which was also named a defendant in the action) was headquartered in the Netherlands. The claims against the parent company were dismissed because pursuant to Nigerian law, a parent company is not obliged to prevent the foreign subsidiaries from harming third parties abroad. Our bulletin regarding this decision is available on our website.
However, a similar case to Kiobel was rejected in by the Quebec Court of Appeal in January 2012. There, the Canadian Association Against Impunity attempted to institute a class action against Anvil Mining Limited (Anvil) regarding its alleged complicity in the commission of crimes against humanity and war crimes in the Democratic Republic of the Congo. The Québec Court of Appeal held that if the defendant had a place of business in Québec and if the action that is the subject matter of the litigation occurred in Québec, the Québec courts have original jurisdiction over these matters under the Civil Code. However, Anvil did not have a place of business in Québec and the actions of Anvil’s representatives in Québec had no connection with any of the alleged conduct that occurred in the DRC. Therefore, the Québec Court of Appeal declined jurisdiction on the basis of forum non conveniens (wrong jurisdiction to sue in). For further information on this decision, please see our bulletin.
Additionally, a similar case is currently being dealt with by Canadian courts. On March 4 and 5, 2013, the Ontario Superior Court heard argument in three actions brought by Guatemalan plaintiffs against HudBay Minerals Inc. (HudBay). In these cases, the plaintiffs make allegations of murder and rape of local community members by security personnel of HudBay’s former Guatemalan subsidiary. HudBay denies the allegations. On the preliminary motions, the company seeks to dismiss the claims on the basis that the statements of claim do not disclose a reasonable cause of action as a matter of law. The motions are under reserve.
Justice Kennedy’s own separate but concurring opinion in the majority highlights the fact that, although this decision may limit the applicability of the ATS for the time being, its scope has not been fully set out and further litigation on this issue can only be expected. “[F]urther elaboration and explanation” will likely be required from the court to set out the proper implementation of the presumption against extraterritorial application of the ATS. Several questions remain unanswered, including whether the ATS will be applicable to actions of a U.S. national (or a corporation with a large U.S. presence) conducted outside the United States and what other connections to the United States the court will deem to have “sufficient force” to displace the presumption of extraterritoriality and render the ATS applicable.
This decision demonstrates the United States Supreme Court’s current desire to respect the jurisdictions of sovereign states, even where alleged human rights violations have occurred. However, other jurisdictions may not be as conservative as the United States and may embrace extraterritoriality in human rights claims. This new wave of cases being brought in jurisdictions other than where the alleged human rights abuses or environmental occurred highlights that companies should develop CSR policies including strong human rights and environmental policies and procedures to avoid such litigation and, in the event of such litigation, to act as a potential defence.
 Filartiga v. Peña-Irala, 630 F. 2d 876, 890 and Sosa v. Alvarez-Machain, 542 U.S. 692
 561 U.S. __ (2010)
 Kiobel at p. 14
 Kiobel at p. 10
 Kiobel at p. 12
 Kiobel at p. 7
 Kennedy, J. concurring at p. 1.