April 24, 2018

Supreme Court Decides Jesner v. Arab Bank, PLC

On April 24, 2018, the Supreme Court decided Jesner v. Arab Bank, PLC, No. 16-499, holding that foreign corporations may not be defendants in suits brought under the Alien Tort Statute (ATS), 28 U.S.C. § 1350.

The ATS grants district courts original jurisdiction over civil actions that foreign nationals initiate for alleged torts that violate international law. To state a claim under the ATS, a plaintiff must first demonstrate that the alleged violation is “of a norm that is specific, universal, and obligatory.” The court must then consider whether separation-of-powers concerns counsel against recognizing a private right of action to pursue the claim at issue absent specific authorization from Congress.

Between 2004 and 2010, thousands of foreign-national plaintiffs sued Arab Bank, PLC, a foreign corporation, under the ATS. They alleged that the Bank’s officials had allowed the transfer of funds through the Bank’s New York office to terrorist groups, who had then used those funds to commit terrorist acts in the Middle East that injured or killed individuals on whose behalf plaintiffs sought compensation. The District Court dismissed the claims, holding that the ATS did not permit such claims, and the Second Circuit affirmed.

The Supreme Court affirmed, holding that foreign corporate defendants are not subject to liability under the ATS. The Court recognized that “human-rights norms must bind the individual men and women responsible for committing humanity’s most terrible crimes”. It concluded, however, that the international community has made the “conscious decision to limit the authority of . . . international tribunals to natural persons”, and held that currently prevailing international law does not recognize “a specific, universal, and obligatory norm of corporate [tort] liability”, as required to state a claim under the ATS.

Turning to the second prong of the ATS standard, the Court reiterated that courts should be reticent to create private rights of action, such as establishing a rule extending potential liability to corporations, where the legislature has not. This consideration was especially heightened in the context of the ATS, which implicates foreign-policy concerns that generally fall within the responsibility of “[t]he political branches, not the Judiciary.” Looking for guidance to the Torture Victim Protection Act of 1991, in which Congress limited liability for acts of torture and extrajudicial killing in violation of international law to only natural persons, the Court concluded that “it would be inappropriate for courts to extend ATS liability to foreign corporations” “absent further action from Congress.” It therefore held that a plaintiff may not sue a foreign corporation under the ATS.

Justice Kennedy announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I, II–B–1, and II–C, in which Chief Justice Roberts and Justices Thomas, Alito, and Gorsuch joined, and the opinion with respect to Parts II–A, II–B–2, II–B–3, and III, in which Chief Justice Roberts and Justice Thomas joined. Justice Thomas also filed a concurring opinion. Justices Alito and Gorush filed opinions concurring in part and concurring in the judgment. Justice Sotomayer filed a dissenting opinion, in which Justices Ginsburg, Breyer, and Kagan joined.

Download Opinion of the Court.

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