Cross-posted at WLF’s contributor site

The U.S. Supreme Court heard oral arguments today in a case that may result in significant limits being imposed on the scope of lawsuits that can be brought under the Alien Tort Statute.  For the past several decades, the ATS has served as the favorite vehicle of human rights activists and plaintiffs’ lawyers seeking to challenge the overseas business practices of U.S. corporations.  The Court’s decision in Kiobel v. Royal Dutch Petroleum will determine whether the ATS applies at all to overseas activities, or whether it is limited to allegations of human rights abuses within the United States.  Based on today’s arguments, the vote is going to be close.

The ATS is a 1789 law that grants jurisdiction to federal courts over tort claims by aliens alleging violations of “the law of nations.”  The law lay dormant for two centuries, primarily because litigants assumed that the number of torts to which the law applied was extremely narrow—perhaps limited only to claims by foreign ambassadors that they had been assaulted in this country.  But in 1980, the U.S. Court of Appeals for the Second Circuit held in Filartiga v. Pena-Irala that the ATS applied to a wide array of alleged human rights violations.  In the decades that followed, activists sued U.S. corporations under the ATS for an increasing variety of overseas activities, from operating facilities that allegedly polluted the environment to administering medications without first providing informed consent to giving financial support to oppressive foreign governments.  WLF has been actively involved in many of those suits, opposing expansive interpretations of the ATS.

The Supreme Court originally agreed to hear Kiobel to decide an issue that had been passed over by the Second Circuit: whether corporations (in this case a British-Dutch oil company) were proper defendants in ATS suits.  But when the case was orally argued before the Supreme Court last March, the Justices displayed much more interest in the extraterritoriality issue than in whether the ATS applied to corporations.  The Court subsequently directed the parties to file supplemental briefs addressing extraterritoriality, and the case was reargued today, the first day of the Court’s October 2012 term.

New historical research regarding the origins of the ATS has uncovered substantial evidence that Congress adopted the statute to permit aliens to file suit to collect damages for wrongs committed within the United States, not to permit aliens to litigate activities that arose in foreign jurisdictions.  For example, Congress adopted the ATS in direct response to the Marbois Affair, a notorious attack on a French ambassador on the streets of Philadelphia in the 1780s.  The fear was that failure to provide satisfaction to ambassadors in a federal court in similar situations might cause significant foreign relations difficulty with France (or whichever nation whose ambassador was attacked).  But similar difficulties would be far less likely to arise if the attack took place on the streets of London.  To the contrary, exercising jurisdiction over such a case might create foreign relations difficulties with Great Britain, a result Congress certainly did not intend when it adopted the ATS.

As is often true in Supreme Court case, Kiobel is likely to come down to the vote of Justice Kennedy.  Oral arguments suggested that Justices Sotomayor, Breyer, Ginsburg, and Kagen are likely to side with the plaintiffs (Nigerian citizens who seek to sue a foreign oil company for its activities in Nigeria), while the Chief Justice and Justices Thomas, Scalia, and Alito appear ready to hold that the ATS does not apply to activities that occurred in a foreign country.  Justice Kennedy appeared troubled by the idea that the ATS should apply indiscriminately overseas, but he also seemed somewhat reluctant to sign on to a decision that could be seen as a rejection of the Filartiga decision.

There was little support on the Court for the compromise position offered by Solicitor General Donald Verilli, who argued on behalf of the United States as an amicus curiae.  Verilli argued that the ATS should never apply extraterritorially when (as here) the defendant is not a U.S.-based corporation.  He argued, however, that when the defendant has strong ties to the United States, the Court should determine on a case-by-case basis whether those ties were sufficient to justify invocation of the ATS.  Justices on both sides expressed skepticism about that position, noting that it would leave the lower courts without any clear rule and would require them in every case to conduct difficult fact-bound evaluations determine whether ATS jurisdiction was warranted.

It seems more likely that the Court will arrive at an all-or-nothing decision regarding the ATS’s extraterritorial reach.  Today’s oral argument suggests that there will be sharp disagreement among the Justices on that issue before a decision is reached.