Second Circuit’s Decision in Kiobel Rejecting Corporate Liability for Assisting Foreign Human Rights Violations

In September 2010 the U.S. Court of Appeals for the Second Circuit in Kiobel v. Royal Dutch Pet. Co., 621 F.3d 111 (2d Cir. 2010), rejected corporate liability in a civil case for money damages under the U.S. Alien Tort Statute (ATS), 28 U.S.C. § 1350. As mentioned in a prior post, this issue in this case will be the subject of a hearing before the U.S. Supreme Court on February 28th.

Subject-matter Jurisdiction

The Second Circuit in an opinion by Judge Cabranes in Kiobel first held, without much discussion, that the ATS incorporates any limitation arising from customary international law on whom may properly be sued as a defendant under the statute and that this was a requirement for subject-matter jurisdiction of the federal courts. No other circuit court, however, has come to this conclusion about such jurisdiction.

This was an important conclusion because federal courts are courts of limited jurisdiction requiring such courts always to determine if they have such jurisdiction and prohibiting the litigating parties from conferring such jurisdiction on the courts by not themselves raising problems over such jurisdiction. This conclusion enabled Judge Cabranes to raise, discuss and decide the issue of corporate liability under the ATS in this case even though it had not been briefed or argued by the parties themselves.

As mentioned in a prior post, the Supreme Court will be examining the correctness of this conclusion by the Second Circuit in this case.

Corporate Liability under ATS

Most of the lengthy opinion by Judge Cabranes held (a) that international law was the relevant law for determining whether corporations (or other legal entities) could be held liable under ATS for alleged violations of the law of nations; and (b) that customary international law and hence ATS did not recognize or allow corporate direct or accessory civil liability for human rights violations. The court, therefore, ruled that the complaint against a corporation had to be dismissed.

Important for the latter conclusion was the court’s view that international criminal tribunals starting with the Nuremberg Tribunal after World War II only imposed criminal sanctions on individuals for violating international legal norms. Other such tribunals, said the Second Circuit, were the International Criminal Tribunal for the Former Yugoslavia, the International Criminal Tribunal for Rwanda and the International Criminal Court (ICC).

The Second Circuit stressed the ICC’s Rome Statute’s limitation of jurisdiction in Article 25(1) to “natural persons.” Equally important for the Second Circuit was the Rome Conference’s development of the ICC’s Rome Statute and the Conference’s rejection of a French proposal to include corporations and other “juridical” persons in the ICC’s jurisdiction because, according to commentators, corporate criminal liability was rejected by many national legal systems and thus such inclusion in the Rome Statute would eliminate the possibility of national systems’ preempting ICC jurisdiction under the principle of complementarity.

One of the judges in the three-judge panel in Kiobel, Judge Leval, submitted an even lengthier concurring opinion. He agreed that the complaint in its entirety had to be dismissed because it did not allege that the corporate defendants had purposefully aided and abetted the Nigerian government’s alleged violations of human rights. (The important issue of the proper legal requirements for aiding and abetting liability will not be before the Supreme Court in this case on February 28th.)

Judge Leval, however,  concluded that international law left to domestic law the issue of whether corporations were civilly liable for aiding and abetting violations of international law and that U.S. law allowed for such liability.

Judge Leval acknowledged that the ICC’s jurisdiction was limited to “natural persons” and that the Rome Conference had rejected the idea of extending the ICC’s jurisdiction to corporations and other legal entities. This structure, said Judge Leval, was due to a belief that a corporation could not act with the requisite criminal intent and the inefficacy of criminal punishment for such entities. On the other hand, Judge Leval quoted the Chairman of the Rome Statute’s Drafting Committee as saying that despite the diversity of views about corporate criminal liability, “all positions now accept in some form or another the principle that a legal entity, private or public, can, through its policies or actions, transgress a norm for which the law, whether national or international, provides, at the very least damages.”

Conclusion

As was noted by the Supreme Court itself in stating the second of the two issues to be argued on February 28th, the U.S. Court of Appeals for the 11th Circuit has disagreed with the Second Circuit on the issue of corporate liability under the ATS. Moreover, three other circuit courts–the 7th, the 9th and the District of Columbia Circuits–also have decided that corporations may be held liable under the ATS.[1]

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[1] An earlier version of this paper appeared in the blog of the American Non-Governmental Organizations Coalition for the International Criminal Court (AMICC).