A majority of the Supreme Court seemed skeptical Wednesday that an 18th-century law allows foreign citizens to sue foreign corporations in U.S. courts over allegations of human rights atrocities committed abroad.
The court has wrestled before with the kind of lawsuits authorized by the Alien Tort Statute, which was enacted by the first Congress in 1789. The justices have limited the kind of actions that can be brought but in 2013 declined to decide whether corporations were immune from suits under the statute.
The new case involves 6,000 foreign citizens who allege that the Arab Bank provided financial services to terrorists who engaged in attacks against Israelis in 2000. The bank is a multinational corporation based in Jordan with a federally chartered branch in New York.
The plaintiffs said the suit was authorized by the Alien Tort Statute (ATS), which was largely ignored for 200 years before human rights organizations began filing suits seeking relief for abuses overseas. The statute allows federal courts to hear “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.”
In the 2013 decision, the justices said that people or entities sued under the ATS must have a real connection to the United States. In the case now before the court, the plaintiffs allege that the branch in New York City meets that obligation.
But the question Wednesday was whether corporations are liable.
While some courts have found that suits against corporations are authorized under the statute, Arab Bank contends they are not because there is no consensus under international law on the issue. The U.S. Court of Appeals for the 2nd Circuit in New York agreed with that position.
Stanford law professor Jeffrey L. Fisher, representing the plaintiffs, said there was no reason to believe there would be an ATS exemption from the “traditional presumption that corporations can be held liable in civil actions.”
But the court’s conservatives were skeptical.
Justice Anthony M. Kennedy worried that Fisher’s position would impose an improper “norm” on corporations, “in the sense that it tells corporations what they must do, how they must run their business.”
Chief Justice John G. Roberts Jr. was concerned about the foreign policy implications of allowing foreign corporations to be brought into U.S. courts.
“I’m wondering if extending it to corporate liability is, in fact, going to have the . . . problematic result of increasing our entanglements, as it obviously has here with respect to the government of Jordan,” he said.
Fisher said that the court had already limited the kinds of cases that can be brought under the ATS and, as a result, “what you have is a very, very small universe of cases.”
The victims in this case allege that the bank used its New York branch to transfer millions of U.S. dollars that were used to finance terrorist attacks between 1995 and 2005 in Israel, the West Bank and Gaza.
“What we allege is knowing and purposeful financing of terrorism with the expectation that it will make those terrorism attacks more successful and more lucrative for the perpetrators, and that is a violation of the Law of Nations,” Fisher said.
The Justice Department took a position in the middle of the dispute.
“There’s a serious question whether the claims in this case have a sufficient connection” to the U.S. to proceed, said Justice Department lawyer Brian H. Fletcher.
But he said the government believes it is also wrong to say that a corporation, unlike an individual, can never be a defendant in an ATS suit.
Justice Elena Kagan picked up on that in her questions to Washington lawyer Paul D. Clement, representing the bank.
“I think you have plenty of things to gripe about in this lawsuit,” Kagan said. “I think the question is, do you have something to gripe about as to this particular point, which is corporate versus individual liability?”
She, along with other liberal members of the court, seemed to think the answer is no.
“If it were an American corporation, I can’t imagine why, if it fell within the international norm, you would free it of liability,” said Justice Stephen G. Breyer.
Added Justice Sonia Sotomayor: “The norm is the conduct, i.e., should you be financing terrorists or not? Should you commit piracy or not? Should you commit slavery, genocide, any of the other prohibited international acts against humanity?”
Clement responded: “No, but Justice Sotomayor, I think it’s critical that in your various formulations, international law does speak to who is the ‘you.’ Who is the actor that can violate international law?”
The case is Jesner v. Arab Bank.