Author:Sterio, Milena
Position:Corporations on Trial: International Criminal and Civil Liability for Corporations for Human Rights Violations


In October 2017, the United States Supreme Court will entertain oral arguments in Jesner v. Arab Bank, a case involving the scope of corporate liability for human rights abuses under the Alien Tort Claims Act ("ATCA"). (1) In Jesner, a group of terrorist attacks victims in Israel, Gaza, and the West Bank have sued a Jordan-based bank, alleging that the bank supported and financed terrorism through maintaining accounts for known terrorists, accepting donations that it knew would be used to fund terrorism, and distributing so-called "martyrdom payments" to families of suicide bombers. (2) The bank has denied any wrong-doing and has emphasized its self-described role as an active and leading partner in socio-economic development in the Middle East. (3) The legal issue before the Supreme Court is not whether the plaintiffs' allegations are true, but instead whether the bank, as a corporate entity, can be sued in United States' court at all, under the ATCA.

The issue of corporate liability under the ATCA was already litigated in Kiobel v. Royal Dutch Petroleum Co. (4) In Kiobel, however, the Supreme Court did not ultimately determine whether corporations can be held liable under the ATCA. (5) Instead, the Court determined that the ATCA was presumptively territorial, and that the plaintiffs in Kiobel could not overcome the presumption of territoriality. (6) Thus, the Court held that cases brought under the ACTA had to "touch and concern" the United States in order to proceed under this Act and that the alleged conduct in Kiobel did not sufficiently concern United States' interests. (7)

Kiobel left many questions unanswered. First, circuit courts have been split as to how to interpret the territoriality requirement under the ATCA. (8) In this regard, the holding of ATCA cases typically fall into one of three categories: (1) that the alleged tortious conduct had to have occurred within the United States, (2) that only relevant/some tortious conduct had to have taken place on American soil, or (3) that the presence of American parties to the litigation may be sufficient to overcome the presumption of territoriality. (9) Second, Kiobel did not address the issue of applicable law, namely whether domestic or international law should apply to the issue of whether corporations can be sued under the ATCA? (10) Those in favor of corporate liability prefer the application of domestic law, which may lead to an easier conclusion that corporations can be sued and held liable under the Act, while those opposed to corporate liability may prefer the application of international law, under which it is uncertain whether corporations may incur civil liability. (11) Lastly, Kiobel did not answer the most fundamental issue: whether corporations may be sued under the ATCA, and if so, under what circumstances? (12)

This Paper will address these complex legal issues in light of and in the context of the Jesner case. In Part I, this Paper will provide a brief overview of the Jesner case. In Part II, this Paper will outline the Kiobel case and its holding. In Part III, this Paper will discuss KiobeFs shortcomings, including the vagueness of its "touch and concern" test and its failure to specify which law--international or domestic--applies to the issue of corporate liability under the ATCA. In Part IV, this paper will then propose other remedies to address corporate misbehavior and complicity in the violation of human rights, including criminal liability and lawsuits against corporate officers. In sum, this paper will conclude that the ATCA may not be the best vehicle to address corporate violations of human rights (although, in the author's humble opinion, the Supreme Court will most likely decide for the plaintiffs in the Jesner case, and in favor of corporate liability under the ATCA).


    Jordan's Arab Bank was founded in Jerusalem nearly a century ago. (13) As of today, it has over 600 branches on five continents." In light of its work with the U.S. Agency for International Development, as well as other organizations, such as Oxfam, Save the Children, and Catholic Relief Services, Arab Bank has described itself as "an active and leading partner in the socio-economic development" of the Middle East. (15) Both the United States' and the Israeli governments have worked with the bank--the former has characterized it as a "constructive partner" in the efforts to prevent terrorism financing and the latter has used Arab Bank as a conduit to transfer taxes collected for the Palestinian Authority. (16)

    Despite this seemingly positive image of Arab Bank, a group of plaintiffs has recently sued the bank in United States' federal court. (17) The plaintiffs, a group of victims of terrorist attacks committed in Israel, the West Bank, and Gaza between 1995 and 2005, allege that Arab Bank aided and abetted terrorist activity, by maintaining accounts for known terrorists, accepting donations that would be used to fund terrorism, and distributing millions of dollars to families of suicide bombers (so-called "martyrdom payments"). (18) The plaintiffs' law suit was filed under the ACTA--a federal law, enacted as part of the Judiciary Act of 1789, which gives federal courts jurisdiction over "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." (19) It is unclear as to why ATCA was enacted; Judge Friendly famously stated that "no one seems to know whence it came," and described this act as a "kind of a judicial Lohengrin," after the mythical German knight who suddenly arrives by boat pulled by swans. (20)

    ATCA remained dormant until 1980, when two Paraguayan citizens filed a lawsuit in United States' federal court under this act, alleging that a Paraguayan police official tortured their son and brother to death. (21) This case, Filartiga v. Pena-Irala, effectively resurrected the ATCA and established the precedent that United States' courts will hear cases involving violations of international law norms committed against alien plaintiffs. (22) In the three decades following Filartiga, plaintiffs began to increasingly rely on the ATCA to bring suits against foreign defendants and government officials, but also large multinational corporations, for their role in aiding and abetting human rights violations committed by foreign governments. (23) In light of such increasing reliance on the ATCA, since Filartiga, the Supreme Court has twice weighed in to limit the scope and reach of the ATCA. (24) In Sosa v. Alvarez-Machain, the Supreme Court held that the ATCA is purely a jurisdictional statute which does not provide plaintiffs with a cause of action. (25) Instead, the Supreme Court held that causes of action for lawsuits filed under the ATCA must be found under the common law, formulated by judges. (26) The Supreme Court then held that the common law as of 1789, when the ATCA was enacted, would have contained a narrow set of violations of the law of nations, including violations of safe-passage guarantees, violations of the rights of ambassadors, and piracy. (27) Thus, according to the Sosa Supreme Court majority, claims brought under the ATCA should proceed only if they allege such 18th century-recognized causes of action and if they are widely accepted as a violation of international norms. (28) The Court further specified its holding by cautioning that "the determination whether a norm is sufficiently definite to support a cause of action should (and, indeed, inevitably must) involve an element of judgment about the practical consequences of "allowing litigants to rely on that norm. (29) In addition, the Court held that courts considering claims filed under the ATCA should take into account not only whether international law recognizes the allegedly violated norm, but also whether international law would allow a particular defendant to face liability "if the defendant is a private actor such as a corporation or individual." (30) In Sosa, the Court ultimately held that the plaintiffs cause of action, alleging arbitrary detention as a violation of customary international law, should not be recognized under the ATCA because the prohibition on arbitrary detention had not reached the status of a customary norm of law, sufficiently accepted and universal under international law. (31)

    Post--Sosa, federal courts hearing ATCA claims faced uncertainty. (32) The Sosa holding did not clarify which types of claims could be potentially recognized as providing a valid cause of action under the ATCA. (33) In addition, the Sosa holding left open the issue of corporate liability for aiding and abetting in human rights abuses: could corporations face liability under the ATCA, or should this Statute be interpreted as confining lawsuits thereunder as against private defendants only. (34) This issue was raised in the second ATCA-related Supreme Court case, Kiobel v. Royal Dutch Petroleum Co. (35) Section II below will discuss the Kiobel case in detail, and it will explain how the Kiobel case left several questions unanswered, including the issue of corporate liability under the ATCA. (36) Because lower courts have been reaching conflicting results on this issue, the Supreme Court (presumably) granted certiorari in Jesner. (37)

    Jesner plaintiffs allege that Arab Bank "violated the law of nations insofar as it financed terrorism, and also insofar as it directly and indirectly engaged in genocide and crimes against humanity." (38) According to the plaintiffs, when ACTA was enacted it was "unquestionable" that corporations could face liability in tort law, and this has remained true until today. (39) Thus, according to the plaintiffs, the ACTA should be interpreted to include corporations as potential defendants. (40) While the text of the ATCA limits plaintiffs to "aliens," the statute does not contain a similar limitation as to defendants. (41) Moreover...

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