Client Alert

Second Circuit Holds Corporations Not Liable Under Alien Tort Statute

October 11, 2010

James E. Berger & Charlene Sun

On September 17, 2010, the Court of Appeals for the Second Circuit issued a major and long-awaited ruling under the Alien Tort Statute (ATS), 28 U.S.C. § 1350, a statute that permits non-U.S. nationals to sue in U.S. courts for violations of international law. Specifically, the Court of Appeals in Kiobel v. Royal Dutch Petroleum Co., __ F.3d __, No. 06 Civ. 4876, 2010 WL 3611392 (2d Cir. Sept. 17, 2010) held, by a 2-1 majority, that corporations are not subject to civil liability under the ATS. The case is extremely significant: while the ATS was adopted by the first U.S. Congress in 1789 as part of the original Judiciary Act, the past three decades have seen a huge increase in the number of claims seeking compensation for torts committed abroad. Many of these cases have been brought as class actions against corporations on the grounds that those corporations aided and abetted human rights abuses and political repression in the nations where they were operating. Despite the increase in the number of ATS claims in recent years, the Second Circuit had not been directly presented with the issue of corporate liability in any of its prior decisions. Thus, Kiobel has resolved an important question under the ATS, while simultaneously creating a circuit split that may well result in the issue going to the U.S. Supreme Court.

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