Economic Implications of the Alien Tort Statute

By Reinsch, William A. | Georgetown Journal of International Law, Summer 2012 | Go to article overview

Economic Implications of the Alien Tort Statute


Reinsch, William A., Georgetown Journal of International Law


I. INTRODUCTION

The present context for discussing the impact on business of lawsuits under Alien Tort Statute (ATS) (1) is the Supreme Court's consideration of Kiobel v. Royal Dutch Petroleum Co. (2) The Court's decision on the core issue of corporate liability may settle that issue, but on March 5, 2012, a week after oral argument, the Court issued an order for a rehearing on the issue of extraterritoriality, which had figured prominently in its questioning). (3) The Court set a briefing schedule ending in June, and set October 1, 2012 for reargument.

My central contention here is that U.S. business has been frustrated, at least since the Supreme Court's 2004 decision in Sosa v. Alvarez-Machain, (4) by the prospect that lengthy and expensive lawsuits may be lodged against corporations on an ill-defined universe of grounds. Lawsuits under the ATS have significant tangible and intangible costs to corporate defendants, as well as to targeted countries and to the United States as a whole. Some of these costs, such as legal fees, are easily quantified, while others, such as reputational damage, are more difficult to calculate. Second-order costs, such as opportunity costs in lost commerce to developing economies, are simply unmeasurable, but no less real.

Any serious assessment of the costs of ATS lawsuits would also assess their benefits. Who gains when a company is sued under the ATS? Does the threat of ATS lawsuits affect corporate behavior? Does the possibility of being sued increased corporate sensitivity to human rights or does it disincline them to invest in countries whose governments have poor human rights records? Is the impact of the ATS exclusively at the level of the firm or are there macro-economic consequences?

Before addressing some of these questions, let me say that the standard for aiding and abetting that ultimately prevails in ATS litigation has an important bearing on any cost-benefit analysis. Because a "knowledge" standard allows more scope for suits being filed than a standard of "intent," one can assume that the costs will be higher if a knowledge standard is affirmed. To this end, the National Foreign Trade Council (NFTC) and USA*Engage along with five other trade associations filed an amicus brief with the Supreme Court in Kiobel arguing that "'purpose to facilitate' is the required mental element for aiding-and-abetting claims under the ATS" and not a standard of mere knowledge. (5)

Unless one takes a purely punitive view of ATS litigation, the benefit must be found in somehow changing corporate behavior. Of course, one consequence of proliferating ATS suits may be to deter foreign direct investment in target countries. This is because a broad construction of a "knowledge" standard potentially covers a wide spectrum of corporate activity, and is likely to increase the number of lawsuits and decrease the propensity of companies to invest in such countries. Since the relevant actor in these cases is the government of the country at issue, private investors lack control, or in most cases influence, over the behavior of those governments. In addition, governments change. A government with a good human rights record could be succeeded by one with fewer scruples. A corporation with a direct investment premised on a return over a lengthy period of time faces a dilemma and may well divest rather than face possible ATS suits.

Take Burma, for example. After decades of abysmal human rights performance, the military government has released Aun San Suu Kyi and has held elections, in the wake of which the United States announced the lifting of some of its sanctions. It is not unthinkable that the U.S. government will at some point encourage American companies to invest, as it has done in many other cases. Given a broad construction of a "knowledge" standard for ATS lawsuits combined with the possibility of Burma's government reverting to type, the ATS becomes a significant factor in any cost-benefit analysis and a real deterrent to investment. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Economic Implications of the Alien Tort Statute
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.