This post, part two in a series on international human rights litigation, discusses developments in the United States.
Alien Tort Statute Narrowed - Kiobel v Royal Dutch Shell
A recent decision of the Supreme Court of the United States significantly narrows the application of the Alien Tort Statute (“ATS”). The ATS has in recent years been an important tool of human rights lawyers seeking relief in U.S. courts for violations of international law, usually human rights abuses, committed abroad, often by government officials in developing countries. This law, enacted in 1789, provides that “federal 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”. Its usefulness is illustrated by Filartiga v. Pena-Irala, in which the relatives of a man tortured to death by government officials in Paraguay won a judgment for over $10,000,000 in the Second Circuit Court of Appeals. In another case, the Second Circuit Court of Appeals held Radovan Karadzic could be held liable for his complicity in genocide, war crimes and crimes against humanity committed in Bosnia -Herzegovina. In effect the ATS was akin to forum of necessity.
However, this spring in Kiobel v. Royal Dutch Shell, a 5-4 majority of the Supreme Court, in a decision called “inconsistent with the last 30 years of precedent”, held that the ATS cannot be applied extra-territorily, and thus one cannot sue under the ATS for conduct occurring within the territory of a foreign sovereign. Kiobel and other Nigerian nationals had sued Royal Dutch Shell alleging its complicity in the killing of protesters in Nigeria. The majority held that the plaintiff had not overcome the presumption against extraterritorial applicability of the statute. The court’s reasoning was curious. Why would the law not create jurisdiction over torts against aliens occurring abroad, but only for torts committed against aliens in the United States? What would be the need for such a law, given that the courts already had jurisdiction over torts committed against aliens in the United States? All four other justices concurred in the dismissal of the action but on a different basis. Royal Dutch Shell did not have sufficiently close connection to the United States, despite the fact it operates refineries and gas stations there.
The ATS had been somewhat analogous to forum of necessity, if only for torts in violation of international law. Thus the United States has moved in the opposite direction from Canada, where forum of necessity has taken root, as noted in the previous post of this blog.
Despite Kiobel, a few angles are arguably left open. Because piracy was prohibited by international law in 1789, piracy that occurs outside any nation’s territorial waters might still be within the reach of the ATS. By analogy, torts occurring in a failed state might also be considered to be outside the territory of a foreign sovereign. As well, a case that engages American interests, unlike Kiobel the facts of which had nothing to do with the United States, might fall within the ATS still. As well, statutes that clearly state they are to apply extraterritorially overcome the presumption against extraterritorial applicability. An in-depth discussion of post-Kiobel angles can be found in Professor Michael Dorf’s blog.
Possible Widening of Jurisdiction over Corporations for Wrongdoing by their Subsidiaries Outside the U.S. -- DaimlerChrysler v Bauman
Daimler-Chrysler is another American case in which plaintiffs attempt to obtain a remedy in the U.S. against a multi-national for human rights abuses elsewhere, albeit not under the ATS. The Ninth Circuit Court of Appeals in California recently ruled that a court may exercise general personal jurisdiction over a foreign corporation based primarily on the fact a subsidiary performs services on its behalf in the forum state. The plaintiffs, residents of Argentina, sued DaimlerChrysler A.G. in California on the basis that court could take jurisdiction over the German defendant based on the contacts that its subsidiary -- Mercedes Benz USA LLC, incorporated in Delaware – has in California, where it distributes cars. If the German parent could be sued in California, it may also be forced to defend itself there against certain human rights violations alleged against its Argentine subsidiary. The Ninth Circuit Court of Appeals’ decision in favour of jurisdiction was based on an “agency test”, which has two elements. One, the tasks performed by the subsidiary for its parent (here, the distribution of cars) must be “sufficiently important to the foreign entity (parent) that it would itself perform equivalent services if no agent was available”. Two, the parent must have either actual control or the right of control over the subsidiary. These tests were met by the significant level of sales of Mercedes Benz cars in California, and the powers the parent has over its subsidiary’s operations. The court also noted the fact the parent company does marketing, research and development in California, has litigated in California courts, and its shares are traded on the Pacific Stock Exchange.
Several other American appellate courts have ruled that a court may assert jurisdiction over a parent for the actions of its subsidiary only if the subsidiary is an alter ego of the parent, i.e. that the parent dominates the subsidiary to such an extent that the corporate separateness may be disregarded. The plaintiff did not assert this theory of jurisdiction, nor did the Ninth Circuit base its ruling on it.
The U.S. Supreme Court will hear an appeal from the Ninth Circuit Court of Appeals’ decision, and address the question of whether a court may exercise general personal jurisdiction over a foreign corporation based primarily on the fact a subsidiary performs services on its behalf in the forum state. The hearing will be in the fall, with a decision expected in the spring. Several amicus briefs have been filed in favour of DaimlerChrysler, including one from the U.S. Dept. of Justice (which also filed in favour of the defendants in Kiobel).