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What are the implications of a recent decision, Jesner v Arab Bank, in the US Supreme Court?

The US Supreme Court has decided that the Alien Tort Statute cannot be used to sue foreign companies for egregious human rights violations.

Alex is a solicitor working with Martyn Day in the International Department. Alex first started working for Leigh Day in 2012, when he joined as a paralegal working on the “Mau Mau” litigation. He spent about nine months in Kenya interviewing veterans of the Mau Mau Uprising, before leaving in September 2013 to complete his legal qualifications. Alex qualified into the international department at Leigh Day in September 2017.
Last week, the US Supreme Court decided (in a 5-4 split) that the “Alien Tort Statute” cannot be used to sue foreign corporations for egregious human rights violations. The case, Jesner v Arab Bank, has a long and complicated history, and the decision has been widely discussed (and criticised) elsewhere (see, for example, here, here or here). This blog is to set out, briefly, what the decision in Jesner means and how it represents part of a worrying trend of courts closing off avenues for victims to seek justice from powerful multinational corporations.

The Alien Tort Statute

The ATS dates back to 1789. It was originally enacted to allow non-Americans (“aliens”) to sue other non-Americans in the American courts for violations of “the law of nations”– usually interpreted to refer to egregious human rights violations such as torture and genocide. The ATS was mainly unused for 200 years until 1980 when a Paraguayan family living in New York relied on it to sue a Paraguayan police officer who they allege had murdered one of their relatives before moving to America. Despite the case involving a crime committed abroad and between two foreign nationals, the US courts had jurisdiction to apply the ATS. Since then, the US courts have sought to limit the ATS’s application to only the most heinous international crimes and in ever limited circumstances.  

Nonetheless, claimants have successfully relied on the ATS against powerful multinationals alleged to be complicit in human rights abuses. For example, in 2005, oil giant Unocal reached a confidential settlement with local villagers who were tortured and murdered by the Myanmar military during the construction of a new pipeline. Similarly, Shell was accused of cooperating with the Nigerian government to commit crimes against humanity in the 1990s. Wiwa v Shell settled in 2009 for $15.5m. 

Until a series of recent judgments, culminating in Jesner, the ATS was considered by many as representing the best chance for holding MNCs accountable for human rights violations worldwide. 

Jesner v Arab Bank

The claimants in Jesner are victims of terrorist attacks across the Middle East. They allege that Arab Bank (a Jordanian institute), facilitated payments to the terrorists and laundered money for them. The transactions in question were processed in Arab Bank’s New York office and the claimants argued this gave the US courts jurisdiction under the ATS. 

Since Kiobel v RDS in 2013 non-American corporations can only be sued under ATS where the crimes ‘touch and concern’ the US. Arguably, Jordanian transactions being processed in New York is too tangential to pass this test. The Supreme Court could have rejected the claim on this ground. Instead, in the words of the dissenting Justice Sotomayor, they “used a sledgehammer to crack a nut”. The majority found that foreign corporations cannot be sued under the ATS, full stop. This blanket ban means that non-American companies cannot be held accountable under ATS even if a sufficient link to America could be proved (or, even if the crime was committed in America).  

The Court’s reasoning included some bizarre logic. Justice Kennedy argued that allowing foreign companies to be sued in America would “discourage American corporations from investing abroad” as they may fear that the country in question would reciprocate and investigate American companies for similar violations. Bearing in mind that the allegations are complicity in human rights abuses, this does not seem to be the most pressing concern. He also argued that instead of suing the corporation, a victim should instead pursue the individual who committed the actual abuse. In practical terms this means that a Nigerian fisherman could not sue Shell for a massive oil spill destroying his livelihood; he would have to pinpoint the Shell engineer/manager/board member whose actions could be said to have caused the spill (and hope, if successful, that this individual had enough money to remedy the damage). 

Impact

The Supreme Court’s conservative majority has deprived claimants of one of the few potential avenues to obtaining justice from companies which profit from international crime. Jesner is part of a worrying trend of decision-makers, worldwide, undermining efforts to make companies legally accountable for wrongs committed in countries where bringing claims for human rights abuses is difficult – and preventing victims from seeking justice via foreign courts.  

On this side of the Atlantic, we at Leigh Day continue to bring claims against multinational corporations based in the United Kingdom whose actions are alleged to have caused harm to impoverished communities abroad.  The defendants in these actions have recently turned to bringing jurisdictional challenges in order to close the door to justice via UK courts for these victims, who often have no other route to redress.  This judgment is the latest reminder that concerted efforts across the globe are being made to stymie the momentum for legally binding corporate accountability. At this crucial time it is of the utmost importance for defenders of marginalised, vulnerable and oppressed communities to continue to fight for reliable, transparent and effective mechanisms for redress – including the right to be heard in the UK courts. 

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