On April 24, 2018, the United States Supreme Court issued its much-anticipated decision in Jesner v. Arab Bank, PLC, 138 S. Ct. 1386 (2018), conclusively holding that the Alien Tort Statute (“ATS”) does not afford a private right of action against foreign corporations. In so holding, the Court has given foreign corporations — particularly those domiciled in nations that lack meaningful civil remedies for acts amounting to violations of international law — cause for at least temporary relief.
Previously, in Kiobel v. Royal Dutch Petroleum, 569 U.S. 108 (2013), Quinn Emanuel obtained a landmark, unanimous 9-0 decision in the Supreme Court holding that the ATS does not apply extraterritorially to so-called “foreign cubed” cases, i.e., cases in which the plaintiffs, defendant, and underlying alleged conduct all occurred abroad. 569 U.S. at 124-25. In Jesner, the Supreme Court definitively resolved the question it left unresolved in Kiobel: whether corporations can ever be subjected to liability under the ATS by confirming that they cannot.
Enacted in the Judiciary Act of 1789, the ATS provides jurisdiction for aliens to bring civil actions for torts “committed in violation of the law of nations or a treaty of the United States.” 28 U.S.C. § 1350. Although the statute was rarely used prior to 1980, the ATS became a popular tool for public interest organizations seeking to bring actions on behalf of plaintiffs claiming human rights violations abroad, often at the hands of foreign governments that enjoy sovereign immunity against such suits. In Kiobel, the district court held that the ATS does not authorize suits against corporations and dismissed the plaintiffs’ claims. 569 U.S. at 114. After the Second Circuit affirmed, the Supreme Court unanimously affirmed the Second Circuit’s decision in favor of Quinn Emanuel’s client on the alternate ground that the ATS does not apply extraterritorially to “foreign cubed” cases, but it did not address whether corporations may be sued under the statute outside of “foreign cubed” factual contexts. 569 U.S. at 124-25.
In Jesner, victims of terrorist acts attributed to
Hamas sued a major Jordanian bank, Arab Bank, PLC, in the United States District Court for the Southern District of New York. Id. at 1393-94. The plaintiffs alleged that Arab Bank was complicit in Hamas’s actions by facilitating its funding by (i) clearing dollar-denominated transactions through the Clearing House Interbank Payments System (“CHIPS”); and (ii) laundering money for the Texas-based Holy Land Foundation for Relief and Development, a charity plaintiffs alleged was affiliated with Hamas. The plaintiffs further alleged that Arab Bank conducted both activities in part through its New York branch. 138 S. Ct. at 1394-95. Although the Second Circuit’s intervening decision in Kiobel barring suits against corporations was affirmed by the Supreme Court on different grounds, the Second Circuit’s holding that corporations are not amenable to suit under the ATS remained controlling precedent in that Circuit. Thus, the district court dismissed the Jesner case and the Second Circuit affirmed.
Although Jesner squarely presented the question of corporate ATS liability left unresolved in Kiobel, a five Justice majority of the Supreme Court held in an opinion by Justice Kennedy that foreign corporations cannot be subjected to liability under the ATS. The Court reached this conclusion because it found the ATS was designed to be modest and narrow in scope with the purpose of improving foreign relations, id., and that extending the ATS to provide a remedy against foreign corporations is more appropriate for Congress than the Court. Id. at 1402-03. Turning to the facts of Jesner, the Court found that it would thus “be inappropriate for courts to extend ATS liability to foreign corporations.” Id.
Although the Court still did not go as far as the Second Circuit did in Kiobel in finding that liability under the ATS was precluded for any corporations, the Jesner decision still has important ramifications:
First, the Jesner decision clearly relegates the issue of foreign corporate liability for violations of...
