Monday, November 22, 2010

U.S. Court of Appeals Relies Upon Rome Statute in Case Raising Issue of Corporate Liability Under the Alien Tort Statute

By Duane W. Krohnke
Adjunct Professor, University of Minnesota Law School

In September 2010 the U.S. Court of Appeals for the Second Circuit in Kiobel v. Royal Dutch Pet. Co., 621 F.3d 111 (2d Cir. 2010), pet. for reh'g & reh'g en banc (2d Cir. Oct. 15, 2010), once again relied upon the ICC's Rome Statute in a civil case for money damages under the U.S.' Alien Tort Statute (ATS), 28 U.S.C. § 1350.

The court in a lengthy opinion by Judge Cabranes held (a) that international law was the relevant law for determining whether corporations (or other legal entities) could be held liable under ATS for alleged violations of the law of nations; and (b) that customary international law and hence ATS did not recognize or allow corporate direct or accessory civil liability for human rights violations. The court, therefore, ruled that the complaint against a corporation had to be dismissed.

Important for the latter conclusion was the Rome Statute’s limitation of jurisdiction in Article 25(1) to “natural persons.” Equally important for the Second Circuit was the Rome Conference’s rejection of a French proposal to include corporations and other “juridical” persons in the ICC’s jurisdiction because, according to commentators, corporate criminal liability was rejected by many national legal systems and thus such inclusion in the Rome Statute would eliminate the possibility of national systems’ preempting ICC jurisdiction under the principle of complementarity.

One of the judges in the three-judge panel in Kiobel, Judge Leval, submitted an even lengthier concurring opinion. He agreed that the complaint in its entirety had to be dismissed because it did not allege that the corporate defendants had purposefully aided and abetted the Nigerian government’s alleged violations of human rights. But Judge Leval concluded that international law left to domestic law the issue of whether corporations were civilly liable for aiding and abetting violations of international law and that U.S. law allowed for such liability. Judge Leval acknowledged that the ICC’s jurisdiction was limited to “natural persons” and that the Rome Conference had rejected the idea of extending the ICC’s jurisdiction to corporations and other legal entities. This structure, said Judge Leval, was due to a belief that a corporation could not act with the requisite criminal intent and the inefficacy of criminal punishment for such entities. On the other hand, Judge Leval quoted the Chairman of the Rome Statute’s Drafting Committee as saying that despite the diversity of views about corporate criminal liability, “all positions now accept in some form or another the principle that a legal entity, private or public, can, through its policies or actions, transgress a norm for which the law, whether national or international, provides, at the very least damages.”

The plaintiffs in Kiobel have requested rehearing, and their Petition and its five supporting amici curiae briefs raise serious issues regarding the panel's majority opinion's rejection of corporate liability under ATS. These papers set forth the following arguments as to why corporations should be liable under the ATS:

• The text of the ATS, as adopted in 1789, provided jurisdiction over "all causes" for certain torts against aliens and did not exempt corporations. (Emphasis added.) The statute specified the identity of the plaintiff ("an alien"), but did not specify the identity of the defendant. Moreover, the ATS did not require criminal conduct as a precondition for such a lawsuit. Finally, the weight of the textural and historical evidence suggests that the First Congress in 1789 would have considered corporations to be proper defendants under the ATS.

• The Supreme Court in the Sosa v. Alvarez-Machin, 542 U.S. 692 (2004), held that there must be a violation of international law for a proper claim under the ATS. But Sosa also held that federal common law provides the cause of action and thereby implicitly recognized that international law did not define all aspects of an action under the ATS. In dictum and in a footnote, Sosa stated that lower federal courts should consider "whether international law extends the scope of liability for a violation of a given norm to the perpetrator being sued, if the defendant is a private actor such as a corporation or individual." (542 U.S. at 732 n.20.) This footnote made the uncontroversial point that some, but not all, international norms require state action and that private actors (whether natural persons or corporations) were potentially liable only for those norms that did not require state action. The majority opinion in Kiobel misread this footnote as calling for international law, not domestic law, to provide the specifics on a private cause of action.

• The Second Circuit itself had consistently entertained ATS actions against corporations.

• Other circuit courts also have regularly considered ATS cases against corporations without objection. And the Eleventh Circuit expressly has held that corporations are subject to suit under the ATS.

• International law leaves the question of private civil liability to domestic law and enforcement. Indeed, the Second Circuit itself has recognized this point. In Kadic v. Karadzic, 70 F.3d 232, 246 (2d Cir. 1995), the court said, "The law of nations generally does not create private causes of action to remedy its violations, but leaves to each nation the task of defining the remedies that are available for international law violations."

• International law also leaves the question of criminal liability primarily to domestic law and enforcement. The relatively new ad hoc international criminal tribunals and the even newer International Criminal Court provide additional and extraordinary means of criminal enforcement when domestic legal systems are unable to do so. Kiobel's majority opinion's reliance on the fact that these international criminal tribunals' jurisdiction is limited to natural persons is misplaced. Indeed, the ICC's Rome Statute in Article 10 provides that its definition of crimes should not be read "as limiting or prejudicing in any way existing or developing rules of international law for purposes other than this Statute." Likewise, that Statute's Article 22(3) states that the limitations on its jurisdiction (including the limit to natural persons) "shall not affect the characterization of any conduct as criminal under international law independently of this Statute." Finally, Article 25(4) of that Statute provides that "[n]o provision in this Statute relating to individual criminal responsibility shall affect the responsibility of States under international law," meaning that States' responsibility to enforce international law through their own domestic legal systems is unaffected.

• Moreover, international law requires states to provide domestic law civil remedies.

• International law in all its forms allows the imposition of civil liability on corporations. This is so in a diverse array of treaties, in general comments by treaty bodies and in a special report to the U.N. Secretary-General on the subject of businesses' human rights obligations. Another source of this principle is the uniform recognition of corporate liability in legal systems around the world.

• In Nuremberg-era jurisprudence and the international trials that took place in occupied Germany after World War II, certain non-natural persons (the Reich Cabinet, the SA, the German High Command, the Leadership Corps of the Nazi Party, the SS with the SD as an integral part and the SS) were indicted with the first three being acquitted and the last three being convicted. In addition, severe sanctions were imposed on some corporations. For example, by directive of the Control Council, I.G. Farben and several insurance companies were dissolved and their assets were liquidated. These facts show how the Kiobel majority erred in concluding that Nuremberg-era jurisprudence did not recognize the liability of corporations for violations of international law.

In addition, the Kiobel Petition asserts that the corporate liability issue was "never raised, briefed, or argued in this case at any point, including this appeal" and that the resulting decision on this issue "subverts accepted standards of appellate process." This procedural argument was supported by an amici curiae brief by nine professors of federal jurisdiction that stated that the panel's majority opinion erroneously treated the corporate liability issue as part of subject matter jurisdiction and that this issue was a merits issue that should not have been resolved sua sponte by the court itself, but only after full briefing and argument by the parties.

We await the circuit court's ruling on the petition and any subsequent rehearing.

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