Litigation Alert: The Second Circuit Rejects Corporate Liability Under The Alien Tort Statute

Kiobel v. Royal Dutch Petroleum Co. et al.

Executive Summary

The Second Circuit Court of Appeals, in a majority decision issued in an action brought against Shell alleging complicity in human rights violations in Nigeria, held that because corporate liability is not recognized under customary international law, federal courts do not have jurisdiction to hear cases brought against corporations under the U.S. Alien Tort Statute. Background Plaintiffs, residents of the Ogoni Region of Nigeria, commenced this action in 2002 in federal court in New York alleging that the Shell defendants were complicit in the Nigerian government's international law violations. The lawsuit was brought under the Alien Tort Statute (ATS), a 1789 U.S. statute under which plaintiffs have brought numerous claims against multinational corporations in the last two decades alleging serious violations of human rights. In 2006, the trial court dismissed a certain number of plaintiffs' claims, but denied defendants' motion to dismiss others. Both sides appealed the lower court's decision.

Second Circuit's Decision

The majority's decision, written by Judge José Cabranes and joined by Chief Judge Dennis Jacobs, answered two questions that had not previously been decided by the Second Circuit. First, what law governs whether ATS claims can be brought against corporations? Second, does that governing law recognize corporate liability? The majority held that international law, and not domestic law, governs the scope of liability for violations of customary international law under the ATS. Having concluded that international law controlled their inquiry, the majority "next consider[ed] what the sources of international law reveal with respect to the existence of a norm of corporate liability under customary international law." The sources of international law reviewed by the majority included decisions of the post-World War II Nuremberg Tribunals, international tribunals since Nuremberg (such as the International Criminal Tribunals for the Former Yugoslavia and for Rwanda), international treaties (including the Rome Statute of the International Criminal Court), and the work of renowned professors of international law. The majority concluded that "[t]ogether, those authorities demonstrate that imposing liability on corporations for violations of customary international law has not attained a discernible...