Corporations Should be Held Liable for Violations of the Law of Nations
by Joe Schottenfeld, Paul Strauch and Beatrice Walton
Ed. note. This article is the latest in our series on the U.S. Supreme Court case Jesner. v. Arab Bank, a case that is slated to resolve the question of whether corporations can be sued under international law for human rights violations and terrorism.
In Jesner v. Arab Bank, the Supreme Court will soon take up a key question left unanswered after its 2013 decision in Kiobel v. Royal Dutch Petroleum: Can corporations be held liable for violations of the "law of nations" under the Alien Tort Claims Act (ACTA)? Our brief on behalf of the Center for Global Legal Challenges argues yes. As our analysis of the international authority on several important international norms confirms, corporations can indeed violate international prohibitions comprising the modern "law of nations."
According to the text of the ATCA, sometimes called the Alien Tort Statute, ATCA jurisdiction is limited explicitly to a "civil action" filed by an "alien," "for a tort only," and that tort must be "committed in violation of the law of nations." The ATCA does not, however, contain any particular restrictions on who may be sued under the statute. Instead, as the Court observed in Sosa v. Alvarez-Machain, whether a suit may proceed hinges on whether the Court can find that "a given norm" extends "to the perpetrator being sued."
However, because the Court decided Kiobel based on the presumption against extraterritoriality, it avoided completely the question of whether corporations could be held liable for violations of the "law of nations" under the ATCA. Since then, lower courts have taken different approaches to the question of corporate liability. Nonetheless, all but one circuit has found that corporations can be held liable under the "law of nations." The Second Circuit has been the outlier, holding categorically in Kiobel, and most recently in Jenser, that corporations cannot be subject to ATCA liability under customary international law.
Our brief disagrees with the Second Circuit and argues that corporations can be held liable for at least eight prohibitory norms of international law, the first three of which are at issue in Jesner: genocide, crimes against humanity, financing terrorism, torture, extrajudicial killing, war crimes, slavery, and piracy. Each of these norms is sufficiently specific, universal, and obligatory to meet the requirements established in Sosa—and each can apply to corporations.
The ATCA's application to corporate conduct retains firm roots in universally prohibited crimes—including the original and paradigmatic ATCA crime of piracy. In the 18th century, piracy was top-of-mind as a principal offense against the "law of nations," and the Supreme Court has for nearly two centuries recognized it as such. Notably, eighteenth century pirate groups were highly organized, profit-driven entities—much like their modern counterparts. Indeed, as the Seventh Circuit recently observed in reference to early in rem cases against pirate groups, judgments against pirate ships imposed costs on ship owners in the same way that a fine imposed on a corporation ultimately falls on shareholders.
Various international courts have also applied international prohibitions to profit-driven non-state actors. In the 1880s, international antislavery courts seized, condemned, and allowed the auctioning of over 550 ships for participating in slave trade. And in the modern era, while no international criminal court has possessed jurisdiction over corporations, several have considered corporations capable of violating international law. For example, at Nuremberg, one tribunal found that the I.G. Farben conglomerate had acted in breach of the 1907 Hague Convention by exploiting the military occupancy of Axis Germany to seize private property. More recently, the International Criminal Tribunal for Rwanda in Prosecutor v. Nahimana found that a radio station—a corporate entity—had incited genocide through its broadcasts.
Foreign domestic courts have also provided for civil liability based on the existence of specific and universal international prohibitions. A host of domestic laws internalizing obligations to prosecute under the Rome Statute of the International Criminal Court do not distinguish between natural and legal persons, such as corporations. In addition, some common law systems allow a non-statutory cause of action for violations of international prohibitions. For example, as the amicus brief on behalf of Canadian Law Scholars in Jesner argues, Canadian law recognizes liability for certain severe violations of customary international law, without distinction as to whether a defendant is a corporation.
Of course, we acknowledge that not all human rights obligations or international agreements present as clear of a case for liability as does piracy, which the Sosa court described as one of the "18th-century paradigms" included within the "law of the nations." Some prohibitions are so recent that they may not yet have achieved the same clarity or universality. Nevertheless, even some relatively newer international prohibitions, such as the prohibition against terrorist financing, present a compelling case for corporate liability under the ATCA.
The prohibition against terrorist financing is a treaty law obligation critical to the customary international law prohibition on terrorism. The International Convention for the Suppression of the Financing of Terrorism (ICFT), to which 188 states including the United States are party, requires state parties to take measures to prohibit the "illegal activities of persons and organizations that knowingly encourage, instigate, organize or engage in the commission" of terrorist financing. Moreover, the U.N. Security Council, in a Resolution sponsored by the U.S. Government, affirmed that "knowingly financing, planning and inciting terrorist acts [is] . . . contrary to the purposes and principles of the United Nations." The United States, like dozens of countries around the world, has directly implemented the ICSFT by criminalizing acts within the definition of terrorist financing found in the Convention, as well as by prohibiting the provision of material support to terrorist groups in Sec. 2339B of Title 18, U.S Code.
No doubt, imposing ATCA liability for breaches of the prohibition against terrorist financing could present certain legal complexities that will demand closer review in the future. Courts and commentators have already struggled in recent years to mark the appropriate contours of "secondary liability," especially in cases of alleged "aiding and abetting" involving corporate actors. Courts may also be advised to contemplate the appropriateness of judicial discretion when corporations or the violations they commit have minimal connection to the U.S., or where the corporation is so tied to a foreign sovereign as to implicate doctrines of comity.
Nevertheless, the answer to the question presently before the Court is clear: regardless of the exact theory of liability, the locus of the acts, and foreign sovereign involvement, the Second Circuit erred in holding categorically that corporations may never be held liable under the ATCA. Corporations have been and can be held liable for violations of the law of nations under jurisdiction granting statutes—both in this country and around the world.
Guest Author,
International Law,
Jesner v. Arab Bank Symposium
Joe Schottenfeld
J.D. Student at Yale Law School, Fellow at the Center for Global Legal Challenges, Co-President of the National Security Group
Paul Strauch
J.D. Student at Yale Law School, Fellow at the Center for Global Legal Challenges
Beatrice Walton
Beatrice Walton is a post-graduate fellow in public international law based in The Hague. She holds a J.D. from Yale Law School.
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