Peter Nestor, Manager, Advisory Services, BSR
The U.S. Supreme Court announced today in its Kiobel v. Royal Dutch Petroleum opinion that cases under the Alien Tort Statute (ATS) will now be presumptively dismissed when the alleged human rights abuses occur outside the United States. This represents the latest Supreme Court opinion on the ability of claimants to litigate human rights cases in U.S. courts (for more background on this case, please see here and here).
Nine justices agreed that the particular case involving Royal Dutch Shell should not proceed in U.S. federal court because the plaintiffs and defendants were foreign, and the alleged events occurred in Nigeria. But the justices disagreed 5 to 4 over to how to handle similar ATS cases going forward.
Chief Justice John Roberts, writing for the majority, held that the “presumption against extraterritoriality” now applies to all cases brought under the ATS. This means that federal courts will presume that ATS cases with allegations of unlawful conduct occurring outside the United States should be dismissed.
The presumption can be overcome with a showing of sufficient evidence, although the majority opinion provided few details about what type of evidence would be sufficient. They recognized that foreign corporations are "often present in many countries,” including in the United States, but noted that this fact alone was not sufficient to overcome the presumption. A U.S. company involved in a human rights case connected with events occurring in another country could be enough to overcome the presumption, but that is not entirely clear from today’s decision.
The four minority justices argued that courts should not presumptively dismiss cases based on where the alleged unlawful conduct occurs. Justice Stephen Breyer, writing for the minority, would have allowed ATS cases to proceed when the conduct occurred in the United States, the defendants were U.S. “nationals” (possibly including U.S. companies), or when the defendant’s conduct adversely affected American interests—a much broader standard.
Justice Anthony Kennedy, a frequent swing vote on the court, agreed with the majority but wrote separately to emphasize that “other cases may arise with allegations of serious violations of international law… [and] the proper implementation of the presumption against extraterritorial application may require some further elaboration and explanation.” This may leave the door open for future courts to consider allegations on more of a case-by-case basis, rather than applying a blanket presumption against foreign conduct.
Our initial assessment after today’s opinion is that most businesses will not likely face suit in U.S. federal court under this ruling, particularly for allegations of abuse occurring abroad. Plaintiffs may still file lawsuits against companies and challenge the presumption to dismiss, but overcoming a presumption of law, while not impossible, is difficult. Plaintiffs may also file cases against companies in U.S. state courts; although it’s not clear how state courts will rule on thorny jurisdictional questions involving international actors and, potentially, international law.
While some clarity in the U.S. courts is welcome, we continue to strongly encourage companies to assess their potential and actual human rights impacts in order to prevent abuses from occurring in the first place. Litigation is by definition a backward-looking tool and can address only events that have already happened. Companies that implement proactive management strategies that seek to understand potential areas of concern and apply effective mitigation techniques can significantly help prevent abuses—and subsequent lawsuits—from occurring at all.
We are encouraged to see so many companies taking steps to increase their understanding of their human rights impacts and following through with action to mitigate risks. Hundreds of companies are adopting human rights policies for the first time and have committed to investigating and addressing human rights risks throughout their operations and business relationships. Many companies have adopted new management techniques and strategies that have significantly helped avoid infringing on human rights.
The power of companies to advance, but also to harm, human rights around the world is significant. We look forward to continuing our work with businesses to develop strategies and techniques to reduce human rights risks and advance human rights opportunities wherever possible.