Academic journal article Harvard Law Review

Alien Tort Statute - Foreign Corporate Liability - Jesner V. Arab Bank, PLC

Academic journal article Harvard Law Review

Alien Tort Statute - Foreign Corporate Liability - Jesner V. Arab Bank, PLC

Article excerpt

The Alien Tort Statute (1) (ATS) has been a creature on the run. Birthed under presumptions of general common law, it found itself in Erie's (2) crosshairs, but was saved by a Court unwilling to put it down fully. (3) Specifically, in Sosa v. Alvarez-Machain, (4) the Court recognized that even if a post-Erie ATS ought to be seen as "purely jurisdictional," (5) a new cause of action may still be recognized if it is founded on "a norm that is specific, universal, and obligatory." (6) The Court has since demonstrated concern about the subsequent growth of ATS litigation. (7) Last Term, in Jesner v. Arab Bank, PLC, (8) the Court again cut back on the scope of ATS litigation, this time holding that foreign corporations could not be sued under the ATS. Jesner's immediate result of excluding foreign corporate liability places the ATS on life support. Yet, perhaps more gravely, the Court's methodology threatens to do greater damage. By first potentially raising the standard for a "specific, universal, and obligatory" norm, and then emphasizing the broad preemptive power of "analogous" statutory provisions, Jesner's interpretation of the Sosa test may prove prohibitive to recognizing any new causes of action. Thankfully for ATS plaintiffs, there are perhaps more forgiving ways to apply Jesner's methodology, which could save the ATS from complete extinction.

Joseph Jesner is one of about 6,000 foreign nationals who allegedly were injured or killed by terrorist attacks abroad. (9) These individuals, or those suing on their behalf, filed ATS lawsuits against Arab Bank, a Jordan-based international financial institution. (10) Plaintiffs alleged that Arab Bank helped finance attacks by terrorist groups through conduct that took place in the United States. (11) In particular, plaintiffs alleged that Arab Bank used its New York branch to clear dollar-denominated transactions that benefited terrorists, and facilitated the transfer of funds to the bank accounts of terrorist-affiliated organizations in the Middle East. (12)

Notably, the Second Circuit had decided previously, in Kiobel v. Royal Dutch Petroleum Co., (13) that foreign corporations could not be sued, (14) a holding that ostensibly foreclosed the Jesner plaintiffs' suit. Yet, because the Supreme Court had ultimately decided the appeal based on the separate question of extraterritoriality, (15) it provided no clear instruction on the correctness of the Second Circuit's foreign corporate liability holding. Nevertheless, taking Kiobel as binding circuit precedent, the district court dismissed the Jesner plaintiffs' suit, and the court of appeals affirmed. (16) Plaintiffs appealed, placing the question of foreign corporate liability before the Supreme Court for the second time.

This time, the Court affirmed on the specific question. At times commanding a five-Justice majority, and at others writing for only a three-Justice plurality, Justice Kennedy relied on principles of judicial restraint, and an application of Sosa, to hold that foreign corporate defendants could not be sued under the ATS.

First, for a five-Justice majority, Justice Kennedy channeled the history of the ATS to demonstrate its limited scope. (17) According to this history, the Articles of Confederation suffered from an "inability ... to ensure adequate remedies for foreign citizens" harmed by violations of international law, leading to foreign relations strife. (18) "[E]nacted ... against the backdrop of the general common law," (19) the ATS was drafted to "furnish jurisdiction for a relatively modest set of actions alleging violations of the law of nations." (20)

Next, Justice Kennedy outlined the modern trajectory of the ATS. He first noted that the Torture Victim Protection Act of 1991 (21) (TVPA) was enacted in the midst of lower court debate about the judiciary's ability to redress international human rights violations through the ATS. (22) Justice Kennedy then noted Sosa's affirmation of a judicial ability to "recognize new, enforceable international norms in ATS lawsuits. …

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