Tag: ATS

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Nestle & Cargill v John Doe at the US Supreme Court. A further restriction of jurisdiction under ATS, with encouragement on corporate culpability as a pudding.

Update 8 September 2021 note the French Supreme Court’s less restrictive approach to ‘aiding and abetting’ in the (criminal law) judgment re Lafarge yesterday. It held complicity in a crimes against humanity case does not require hands-on assistance. As Philip Grant reports, in the view of the French SC it is necessary and sufficient to have had knowledge of the preparation or commission of such acts and that aid or assistance facilitated them; it is not necessary to belong to the criminal organization nor to subscribe to the conception or execution of the criminal plan.

A most late flag on Nestlé & Cargill v John Doe at the US Supreme Court, back in June. I reported on the case here and if you follow Lucas’ thread on the case, there is further interesting and impromptu analysis. Readers of the blog may know I have published on the issue before – search tag ‘ATS’ should give you all cases referred to below.

This case reconfirms the mood viz the Alien Tort Statute,  a popular (if not the only!) vehicle for corporate social responsibility litigation: since Kiobel, the USSC has seriously reigned in the scope of application of the ATS. In Nestlé, it would seem to impose a further squeeze on the ATS jurisdictional gateway. In Apartheid and Jesner Bank, ‘aiding and abetting’ by the US corporate headquarters of culpable conduct by their subsidiaries abroad, seemed to be a burden of proof claimants had to meet in order for the action to be admissible under the ATS. In Nestlé the Court in its current composition (sub III of the majority Opinion) suggests that aiding and abetting in that interpretation risks becoming a court-introduced (hence in its view noli sequi) action in tort.

Sub II, the Court is not at all clear what the jurisdictional hurdle might be, except that it is a very high one: ‘Nearly all the conduct that [claimants] say aided and abetted forced labor—providing training, fertilizer, tools, and cash to overseas farms—occurred in Ivory Coast… allegations of general corporate activity—like decisionmaking—cannot alone establish domestic application of the ATS.’ (Interesting contrast here with the UKSC in ia Vedanta).

Not only could one debate whether this decision represents the intention of the ATS (which, even if one applies it in limited fashion, did historically mean to catch at least in part activities outside of the US). One also immediately sees the most unattractive consequence of this judgment: as long as the dirty work is left for foreign affiliates to carry out overseas, one escapes the reach of ATS. As Lucas points out, it is not clear what kind of headquarter engagement could still trigger a suit under the ATS.

There is little solace in the indication that the Court (both in majority opinion and minority concurrence) accepts that corporations are not as such immune from suit under the ATS (which links to the issues currently discussed in Nevsun Resources). Update 8 September 2021 more on that issue by Doug Cassel here.

There will be more attempts to further refine the ATS scope. At the same time one imagines claimants will study in even greater detail than before, the possibility to bring the suit under more recent US federal laws with clear extraterritorial intent, such as in the field of corruption of export controls. As past (but now gone) ATS litigation shows, human rights and /or environmental suit need not necessarily label themselves as such.

Nomen non est omen. It is the end goal of human rights or environmental protection or, say, environmental justice which determines a suit’s character, no matter what prima facie subject matter the suit addresses. If one can advance these causes by suing under the by-laws of the World Philately Federation, say, one should have a good go at it.

Geert.

EU Private International Law, 3rd ed. 2021, Chapter 7.

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Kiobel v Shell in The Netherlands. Court confirms jurisdiction anchored unto mother holding and qualifies the suit as one in human rights: not tort. Also orders limited use of documents obtained in US discovery and limited continuation of the trial.

Update 26 July 2019 the English version of the judgment is now available here.

In January 2017 I reported that Ms Kiobel, following failure to convince the USSC of jurisdiction under the Alien Tort Statute, subsequently initiated proceedings in the Dutch courts to try and sue Shell over the case. (Evidently unrelated to the pursuit of Shell in The Netherlands on environmental grounds – a case which is still pending upon appeal).

The court in first instance at the Hague on 1 May accepted jurisdiction against

  • both the mother holding. That was not at all under discussion: this is done via Article 4 Brussels Ia’s domicile rule. Use of Article 33 /34’s forum non conveniens-light mechanism was not suggested;
  • two English-incorporated Shell daughters using Article 8(1) of the Brussels I a Regulation; and
  • the Nigerian daughter company. Against the Nigerian daughter company, jurisdiction needs to be anchored unto the Dutch mother holding using Article 7 of the Dutch CPR, which is a near carbon copy of Article 8(1) Brussels Ia, whose CJEU authority is followed by Dutch courts in the interpretation of the Dutch residual rule.

Coming so soon after the UKSC in Vedanta the Dutch case has received quite a bit of attention. After first not considering an English translation (not surprisingly; these are the Dutch courts, not a World Service), the clerks have now announced that there will be one, coming up some time soon.

Readers of the blog will expect me to hold the judgment against a clear jurisdictional and conflict of laws lens – in doing so, I fear I have to be a little bit less optimistic than media soundbites following the case.

Jurisdictional issues were in the end dealt with fairly summarily. Most attention went to issues of evidence and discovery, as well as a first review of the substance of the case.

Of note is:

  • At 4.3: acceptance by all parties of of Nigerian law as the lex causae; if need be, choice of law by all parties for Nigerian law as the lex causae. Rome II is not applicable ratione temporis. The case has this in common with the Milieudefensie case against Shell. This being a civil law jurisdiction, ius novit curia applies. The court has taken into account parties’ submissions on Nigerian law yet has also conducted its own research. Foreign law is ‘law’ in the civil law; not ‘fact’ as in the common law.
  • Claimants suggest that in the events in Ogoniland Shell acted as one organisation and treated the issue as one engaging the Shell concern as a whole (4.7 in fine);
  • Claimants purposedly do not wish their claim to be qualified as one engaging piercing of the corporate veil; duty of care; shareholders responsibility; or tort of negligence. Rather, as one engaging the Shell concern directly in a suit on infringement of human rights included in the African Charter on Human and Peoples Rights (ACHPR) and the Nigerian constitution. Tort is only suggested as an alternative should the court not follow the arguments on the basis of human rights (4.8).
  • At 4.12 the Court accepts the horizontal direct effect of human rights under Nigerian law, referring for that finding to Nigerian case-law. At 4.19 the Court notes the absence of statutes of limitation for human rights violations under Nigerian law: thus qualifying this as an issue of substance (lex causae), not procedure (lex fori). It revisits the statute of limitation issue at 4.47 ff (holding that under Nigerian law the suits can still be brought).
  • At 4.26 the court applies A8(1) BIa and A7 Dutch CPR in globo, given the same lines of interpretation, and finds succinctly that all conditions (Kalfelis; Roche Nederland; The Tatry) are met. It remarks at 4.26 in fine that given the same situation of law and fact, it was predictable for all parties that they might end up being sued in any of their corporate siblings’ domicile.
  • At 4.27 the court discussed summary dismissal. As seen in Vedanta, despite Owusu European courts are within their rights to reject the case in summary judgment if there is no ‘real issue’ to be tried against the anchor defendant. However this only applies against non-EU based defendants. Application of Article 8(1) does not allow such summary dismissal for EU-based defendants (see also C-103/05 Reisch Montage). The Hague court reviews summary dismissal only vis-a-vis the Nigerian defendant but finds succinctly that the suit is not prima facie without merit. There is a serious issue to be tried.
  • At 4.28 interestingly the Court rejects relevance of the High Court and the Court of Appeal‘s dismissal of jurisdiction in Okpabi, arguing that these courts employed ‘English law’. This underscores the argument I have made elsewhere, that there is a serious blank in the discussion on lex causae for the duty of care or, depending on the case, the piercing issue. The Dutch court here notes without hesitation that the English courts apply lex fori to that test, and so therefore, I am assuming, should they (meaning Dutch law in their case)?
  • At 4.29 it looks as if the Court considers some kind of reflexive argument which defendants seem to have made. Namely that the Dutch courts should respect the exclusive jurisdictional head under the Fundamental Rights (Enforcement Procedure) – FREP Rules, for the Federal High Court in cases involving alleged infringement of human rights. However the Dutch court considers this a mere internal jurisdictional distribution rule, which does not hinder the Dutch courts in their assessment of the claims. There is no written or unwritten rule in Dutch private international law which suggests such deference to a Nigerian civil procedure rule.

Importantly, a great deal of attention at 4.30 ff  goes to the debate on the use of documents obtained in US discovery, in the Dutch proceedings. A fair amount of these had to be returned following a confidentiality agreement in the US proceedings. Claimants make recourse to Article 6 ECHR to regain access for use in the Dutch proceedings however the Dutch court curtails much of that. Common law discovery rules are notoriously more claimant friendly than those of the civil law (a comment also made by Marsh CM in Glaxo v Sandoz). It leads to Shell not having to turn over quite a large part of the documents claimants had hoped to use. [Note 18 May 2019 in my original post of 17 May I had ‘common’ law and ‘civil law’ accidentally mixed up in the previous sentence].

At 4.58 ff the Court then turns to the substance of the case for case management reasons, with a view to determining which parts of the claim may be made subject to further proof. It holds in a way which I imagine must have been very disappointing for claimants. Only limited claims (of the Nigerian daughter’s involvement in the bribing of witnesses) will be allowed to continue.

The court held that claims of controlling meddling in the Nigerian court proceedings were not proven with sufficient force for these claims to continue – instead it held that Shell’s policy of silent diplomacy, in line with its business policies, had been consistently carried out.

All in all I would suggest claimants have scored clear points on jurisdiction, minor points on discovery and a disappointing outcome for them on substance. Albeit that the witness bribe leg may still lead to a finding of human rights infringement.

Geert.

(Handbook of) European private international law, second ed. 2016, Chapter 8, Headings 8.3.1.1., 8.3.2.

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Jesner v Arab Bank. Scotus does not play ball on corporate culpability under international law.

For background to this week’s SCOTUS ruling in  Jesner v Arab Bank see my earlier posting. Bastian Brunk has early reflection here, with good summary of the Court’s majority (as well as dissenting) opinion.

Human rights litigation under ATS is not dead. Yet it is clear it is not going to be routine, either. I find the judgment not surprising. While one could certainly from a political point of view bemoan that ATS is not providing the avenue to hold corporate excess to account,  SCOTUS have a point when

  • they emphasise the foreign policy intentions of the ATS when it was originally drafted. Hence the need not to ignore the same foreign policy implications 2 centuries on. Hence also my stance on JASTA.
  • they highlight the continuing de lega lata situation on corporate culpability under international law: the default position remains that corporations are not subjects of public international law. Yes there are hard-core exceptions – and these may be further developing. And yes, plenty over the past 20 years have tried to  change that status quo. Finally the Court could have flagged more of those attempts that raise serious doubt over the position. However it is hardly the role of the US Supreme Court single-handedly to force the hand of the league of nations.
  • separation of powers in the US, too, demands Congress intervene should it want the Statute’s causes of action to be broadened.

All in all a ruling very much in Montesquieu’s spirit. Students of public international law in particular should read the judgment with care: there is plenty in there to chew over.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 8, Heading 8.2.

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Jesner v Arab Bank. Corporate culpability, the substantive question ignored in Kiobel, makes certiorari.

Update 13 October 2017: Oral hearing took place this week. See here for reporting in particular on Gorsuch J’s unexpected line of questioning.

Thank you, Ludo Veuchelen, for alerting me to Adam Liptak’s reporting on Jesner v Arab Bank, in which certiorari was granted by the United States Supreme Court early April. The case may finally have us hear SCOTUS’ view on the question which led to certiorari in Kiobel but was subsequently ignored by the Court: whether corporations can be culpable for violation of public international law. ‘May’ is probably the keyword in the previous sentence.

Update 18 January 2018 One thing to look out for is whether SCOTUS will refer to developments in ICSID /World Bank arbitration, particularly Urbaser v Argentina where the Panel noted at 1195

‘it can no longer be admitted that companies operating internationally are immune from
becoming subjects of international law. On the other hand, even though several initiatives undertaken at the international scene are seriously targeting corporations human rights conduct, they are not, on their own, sufficient to oblige corporations to put their policies in line with human rights law. The focus must be, therefore, on contextualizing a corporation’s specific activities as they relate to the human right at issue in order to determine whether any international law obligations attach to the non-State individual.’

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 8, Heading 8.2.

 

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Institute of Cetacean Research v. Sea Shepherd Conservation Society: A great illustration of (failure of) injunctive relief under ATS.

Institute of Cetacean Research v. Sea Shepherd Conservation Society has recently come to my attention thanks to Juliett Hatchett over at Baker: her analysis is spot on and I am happy to refer to it. She summarises the case as the district court confirming that perpetrating and funding piracy and unsafe navigation are within the scope of ATS jurisdiction, but holding that there is no enforceable international norm against whaling or financing terrorism.

The case is not easy to find however Sea Shepherd tend to link to court documents in their updates on the litigation.

I flag the case mainly to bring it to readers’ attention that CSR litigation can be done proactively: one need not wait for alleged violations of relevant legal standards to seek to seize a court. Exactly a point I assessed in the context of vulture fund litigation, end of May. (And in forthcoming paper).

Geert.

 

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Doe v Nestle and Tiffany v China Merchants Bank et al: The concertina effect of the Alien Torts Statute

Update 29 October 2020 Amicus curiae briefs are now coming thick and fast.  See e.g. this one of international lawyers and scholars, advocating for a broad interpretation of the ATS. Update 27 May 2020 thank you Russell Hopkins for flagging the US Government amicus curiae brief on this (and the Cargill) case.

Update 8 July 2019 for the latest in the Doe v Nestle case see the Court of Appeals for the Ninth circuit here. The majority held that held that plaintiffs allege concrete and redressable injury that was fairly traceable to the challenged conduct of one defendant, and their allegations against another defendant were sufficient to allow a final opportunity to replead. This gives them enough standing for the case to continue on the merits.

I may yet have to insert a special category ‘ATS’ in the ‘Categories’ on the right hand side of this blog. Distinguishing, and precedent application alike keep on stretching cq enforcing the USCC’s decision in Kiobel.

On the precedent side of the debate,  Tiffany v China Merchants Bank et al , the US Second Circuit Court of Appeals took the application of Kiobel in Daimler as cue for a refusal of the recognition of Asset Restraints and Discovery Orders against a Bank with merely branch offices in New York. The Bank’s sites of incorporation and principal places of business are all outside of the US. With reference to Daimler, the Court held that there is no basis on which to conclude that the Bank’s contacts in New York are so ‘continuous and systematic’ judged against their national and global activities, that they are ‘essentially at home’ in the State.

The Ninth Circuit Court of Appeals in Doe v Nestle reversed the lower court’s decision to dismiss ATS claims and arguably indeed adopted an extensive view of ‘aiding and abetting’ within the context of ATS: ‘Driven by the goal to reduce costs in any way possible, the defendants allegedly supported the use of child slavery, the cheapest form of labor available. These allegations explain how the use of child slavery benefitted the defendants and furthered their operational goals in the Ivory Coast, and therefore, the allegations support the inference that the defendants acted with the purpose to facilitate child slavery.’ : these allegations were considered to even meet the supposedly stricter ‘purpose’ test. Defendant’s market power and control over operations abroad seemed to have played an important role.

Applicants have now been allowed to re-plead given the intervening judgments by the USSC (the Doe v Nestle case has been running for a while)- watch this space, yet again.

Geert.

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Al Shimari v. CACI: An ATS case found to touch and concern the US with sufficient force.

Regular or indeed occasional readers of the blog will have been following developments in US case-law since SCOTUS issued its ruling in Kiobel. In Al Shimari v. Caci, the fourth circuit Court of Appeal held in early July that plaintiffs’ claims “touch and concern” the territory of the United States with sufficient force to displace the presumption against extraterritorial application of the Alien Tort Statute: that is the test which SCOTUS set in Kiobel.

Due to a shortage of trained military interrogators, the US hired civilian contractors to interrogate detainees at Abu Ghraib, Iraq – context will be known to readers. During the time period relevant to the civil action, those private interrogators were provided exclusively by CACI Premier Technology, Inc. (CACI), a corporation domiciled in the US. Plaintiffs in the case are foreign nationals who allege that they were tortured and otherwise mistreated by American civilian and military personnel while detained at Abu Ghraib. Plaintiffs allege that CACI employees “instigated, directed, participated in, encouraged, and aided and abetted conduct towards detainees that clearly violated the Geneva Conventions, the Army Field Manual, and the laws of the United States.”

The Court of Appeal noted among many things that SCOTUS in Kiobel broadly stated that the “claims,” rather than the alleged tortious conduct, must touch and concern United States territory with sufficient force, suggesting in the view of the CA that courts must consider all the facts that give rise to ATS claims, including the parties’ identities and their relationship to the causes of action. It found that the claims do concern US territory, pointing to the fact that:

‘the plaintiffs’ claims allege acts of torture committed by United States citizens who were employed by an American corporation, CACI, which has corporate headquarters located in Fairfax County, Virginia. The alleged torture occurred at a military facility operated by United States government personnel.

In addition, the employees who allegedly participated in the acts of torture were hired by CACI in the United States to fulfill the terms of a contract that CACI executed with the United States Department of the Interior. The contract between CACI and the Department of the Interior was issued by a government office in Arizona, and CACI was authorized to collect payments by mailing invoices to government accounting offices in Colorado. Under the terms of the contract, CACI interrogators were required to obtain security clearances from the UnitedStates Department of Defense. Finally, the allegations are not confined to the assertion that CACI’s employees participated directly in acts of torture committed at the Abu Ghraib prison. The plaintiffs also allege that CACI’s managers located in the United States were aware of reports of misconduct abroad, attempted to “cover up” the misconduct, and “implicitly, if not expressly, encouraged” it.‘

(The case nb is not home and dry: whether the claims present non-justiciable political questions still needs to be determined by the district court).

Many out there must be writing PhDs on related issues: a moving target indeed!

Geert.

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That did not take long! DaimlerChrysler v Bauman may clarify Kiobel – Corporate Social Responsibility remains in the Supreme Court spotlight

When I said here that ATS cases might end up at the USSC again, I did not think less than a week later: on Monday, the USSC granted certiorari in DaimlerChrysler AG v Bauman. The issue as summarised over at the SCOTUS blog (which has superb further analysis), is: Whether it violates due process for a court to exercise general personal jurisdiction over a foreign corporation based solely on the fact that an indirect corporate subsidiary performs services on behalf of the defendant in the forum state.

Chief Justice Roberts’s and concurring opinions in Kiobel leave room for further distinguishing – which is what might happen in DaimlerChrysler. The Court had presumably seen sitting on the DaimlerChrysler case until it had decided Kiobel. DaimlerChrysler however will probably have a wider impact than the ATS jurisdictional issues. Accepting jurisdiction against corporations on the basis of the actions of a subsidiary present in the forum State but unrelated to the subsidiary which allegedly violated the law elsewhere, can also apply in an internal US setting.

DaimlerChrysler Ag is a German company, and it was sued in federal court in California for alleged human rights violations in Argentina for actions by a subsidiary in that country.  The basis for suing the company in the U.S. was that it has another subsidiary that sells the company’s autos in California.

Of note is also that the Supreme Court vacated Rio Tinto and sent it back to the Ninth Circuit to be decided on the basis of the Kiobel finding.

Geert.

 

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USSC in Kiobel – Foreign policy implications decide the issue.

Update 18 January 2017. Ms Kiobel is now apparently using Dutch courts to try and sue Shell over the case. (Evidently unrelated to the pursuit of Shell in The Netherlands on environmental grounds). See here for background to the case.

The central question in Kiobel   turned out to be this: whether and under what circumstances US courts may recognize a cause of action under the Alien Torts Statute, for violations of the law of nations, occurring within the territory of a sovereign other than the United States. In focusing on this question (and replying in the negative), the SC did not entertain the question which actually led to certiorari, namely whether the law of nations recognises corporate liability.

I have a paper with Charlotte Luks over on ssrn, which discusses the ATS (and related developments in the EU). The Alien Tort Statute, a product of the United States’ first congress, creates a domestic forum for violations of international law. The relevant text reads,  “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”

Since the path-breaking Doe v. Unocal litigation in 1997, more than 50 cases have been brought in the United States against companies under the Alien Tort Statute alleging corporate involvement in human rights abuse abroad. However In Kiobel v Royal Dutch Petroleum, the United States Court of Appeals for the Second Circuit held that corporations cannot be sued under the Alien Tort State for violations of customary international law because “the concept of corporate liability […] has not achieved universal recognition or acceptance of a norm in the relations of States with each other.” In denying re-hearing, Chief Judge Jacobs argued in February 2011 that

All the cases of the class affected by this case involve transnational corporations, many of them foreign. Such foreign companies are creatures of other states. They are subject to corporate governance and government regulation at home. They are often engines of their national economies, sustaining employees, pensioners and creditors–and paying taxes. I cannot think that there is some consensus among nations that American courts and lawyers have the power to bring to court transnational corporations of other countries, to inquire into their operations in third countries, to regulate them–and to beggar them by rendering their assets into compensatory damages, punitive damages, and (American) legal fees. Such proceedings have the natural tendency to provoke international rivalry, divisive interests, competition, and grievance–the very opposite of the universal consensus that sustains customary international law.

Certiorari at the Supreme Court was keenly awaited by the corporate social responsibility (CSR) community, for ATS litigation by default had become the flag bearer for pursuing alleged violations of international law (whether in human rights or environment) by multinational corporations.

Extraterritorial application of US law was most recently the issue in Morrison v National Australia Bank, in the area of securities. In Kiobel, the SC relies on its extensive review of exterritoriality in Morrison. It did so even if in Morrison (and other cases before it), the question of exterritoriality was one of merits (aka jurisdiction to prescribe): i.e. whether an Act of Congress regulating conduct, applies abroad. By contrast, in Kiobel, the question concerns jurisdiction pur sang (aka jurisdiction to adjudicate). For the SC, this did not dent precedent value of Morrison: ‘we think the principles underlying the canon of interpretation similarly constrain courts considering causes of action that may be brought under the ATS’.

In Morrison, the SC held that when a statute gives no clear indication of an extraterritorial application, it has none. In Kiobel, the Court did not find convincing argument in either text, history, or purpose of the ATS, which could rebut the presumption against extraterritoriality. The closest such rebuttal arguably lay in the historic (and more current) examples of employing ATS against piracy: as the SC notes, ‘piracy normally occurs on the high seas, beyond the territorial jurisdiction of the United States or any other country, [however] applying U. S. law to pirates does not typically impose the sovereign will of the United States onto conduct occurring within the territorial jurisdiction of another sovereign, and therefore carries less direct foreign policy consequences.‘

The latter of course is where the core of the argument lies, and where public, and private international law principles of comity come into play: the degree to which in upholding jurisdiction, the courts in ordinary might be obstructing US foreign policy. As an aside and not having completed my thinking on this: Judge Jacobs’ frank assessment of the respective roles of public and private international law, referred to above, is particularly interesting when one considers the communis utilatis roots of modern conflict of laws The conviction in Dutch conflict of laws in the 17th century (later exported via Scotland to the US), that foreign laws needed to be applied if and when they so wanted, on the basis of reciprocity, and in line with communis utilitatis has now been turned on its head: comity is now being used as a presumption against such application of foreign laws or, here, public international law.

The SC concludes as follows:

On these facts, all the relevant conduct took place outside the United States. And even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application. See Morrison, 561 U.S. ___ (slip op. at 17–24). Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices. If Congress were to determine otherwise, a statute more specific than the ATS would be required.

The Court therefore answers Kiobel-type cases (a foreign plaintiff suing a foreign defendant for acts or omissions occurring wholly outside of the United States that allegedly violate the law of nations), however it does leave open many questions which fall outside the factual Kiobel box. Does the reference to ‘claim’ and ‘territory’ of the US refer to the tortious action (thus requiring that to take place in the US) or would a US defendant suffice (in all likelihood: no)? What ‘link’ would be enough for the action to take place in the US: in particular, lack of corporate oversight over foreign subsidiaries? In all likelihood, further distinguishing will take place by lower courts (and might eventually end up at the SC again), however it is clear that the scope for ATS litigation has been severely diminished. This means that attention may now be re-ignited in what has been brewing in the EU for some time: using national courts to apply national law for conduct abroad: in other words, classic private international law /conflict of laws coming to the limelight once again.

Geert.