Symposium: Dusting off corporate liability in Jesner – Why there is no international consensus and why courts lack authority to innovate on the issue
on Jul 27, 2017 at 10:11 am
Kristin A. Linsley is a partner at Gibson Dunn & Crutcher LLP. The views expressed herein are solely hers and do not necessarily represent the views of Gibson Dunn. In a previous position, she filed an amicus brief for the Coca-Cola Company and Archer Daniels Midland Company in support of the corporate respondents in Kiobel v. Royal Dutch Petroleum.
It is remarkable that the Supreme Court will again consider whether the Alien Tort Statute allows claims against artificial entities such as corporations. Many litigants and commentators thought that the court had washed its hands of that subject after it accepted the issue for review in Kiobel v. Royal Dutch Petroleum but then reframed the question after argument. Now that the question has returned to the court’s docket with Jesner v. Arab Bank, PLC, the parties and the justices will have to dust off their thinking on issues originally presented in Kiobel, including the nature of corporate liability, its status under international law, and whether its application in the U.S. courts should be governed by domestic or international law principles.
As to the first two questions, many sources have documented the lack of consensus among nations for extending international law status to artificial entities such as corporations. International-law precedents for such an extension are virtually nonexistent. Indeed, proponents of liability for corporations often maintain that courts must look to domestic law, not international law, to decide who is covered by international norms. Of the relevant international-law sources to which ATS plaintiffs look for their substantive human-rights norms – the Nuremberg trials, the ad-hoc tribunals for the former Yugoslavia and Rwanda, and the Rome Statute – not one extends such norms to corporations, nor is there any other evidence of a consensus among nations that such an extension would be appropriate.
A less-explored question is why such a consensus is lacking. Some have noted disagreements over whether corporations possess criminal intent or what forms of artificial entities are even recognized. But more significantly, there has been a strong reluctance within the international community to elevate artificial entities to the status of international “persons” or “subjects” – a status that might be viewed not only as imposing international-law obligations upon such entities, but also as implicitly empowering them to comply with those new obligations by engaging in enforcement actions within the territory of the host nation in a way that would undermine the host nation’s sovereign prerogatives.
Some background is helpful to place this issue in perspective. In international law, an “international person” is one that possesses “legal personality” in international law or is “a subject” of international law so as itself to enjoy international-law rights, duties or powers. Once an entity is deemed an international-law “person” or “subject,” it normally acquires not only international-law obligations, but the power and rights historically associated with nations, including the power to carry out any international-law obligations that may be imposed.
Under the “classic” model of international law, only states possess legal personality – thus, only states have powers and obligations under international law; the primary rules of international law are solely addressed to states; and only states incur legal responsibility for breaching those rules. Among the obligations that international law imposes on states is the duty to establish mechanisms for ensuring compliance with international-law strictures by their nationals or others within their territories. Nations implement those mechanisms domestically through their legislative or executive powers, all without any threat to their own sovereignty.
Proposals to extend international-law status, including obligations, to other entities have been controversial within the community of nations because such an extension threatens to alter this balance. A prevalent concern is that such an extension might be seen as imbuing such entities with political rights normally reserved for nations – such as rights to participate in shaping treaties and other international-law instruments, thereby shifting the global balance against nations and in favor of multinational corporations in ways that states do not support.
Such concerns are most acute when the perceived threat is to a nation’s sovereign power within its own territory. Whereas under the “classic” model, control over domestic compliance with international legal duties rests with nations, the imposition of international-law obligations directly on corporations has been viewed as disempowering nations by diminishing their authority to control compliance with international law within their territories. In ATS litigation, many claims premise liability on the theory that a corporation doing business in a foreign nation failed to take steps to ensure that the host nation or others within that nation’s territory were complying with international-law norms. Imposing such obligations on corporations necessarily would require – and thus empower – those entities to exercise some degree of control over such sovereigns or face liability. And requiring corporations to monitor and prevent abuses by police or military forces or private parties within the host nation might well threaten that nation’s own sovereignty, including its responsibility for actions occurring within its borders.
These concerns have not arisen in the same way in the narrow range of categories in which individuals have been found capable of violating international law – a longstanding exception to the “classic” model under which, over time, international norms were recognized to authorize criminal liability under some circumstances for individuals exercising state power, and, in some instances, for non-state individuals. Many precedents for individual liability involve cases in which the individual was exercising sovereign power; these cases are viewed as an extension of sovereign responsibility under even the “classic” international-law model. And the few categories of non-state individual liability arise largely in contexts in which no state’s sovereignty is implicated, such as piracy and terrorism, or when the imposition of liability for a given offense is a function of the nation’s own sovereign obligations within its territory, such as when an offense against an ambassador is involved. These categories of individual liability do not raise the same sovereignty-based concerns as are presented by proposals to accord international-law status to multinational corporations.
Another point that the Supreme Court may consider in Jesner is whether, as some litigants have urged, the issue of corporate liability under the ATS is simply a matter of domestic law, such that U.S. courts, having identified an international-law norm, may simply shape a cause of action and determine what defendants are covered by that norm. Under this view, domestic law governs whether there should be a claim against corporations for international human-rights norms – essentially, “who” is subject to particular international-law norms – even though international law defines “what” conduct is covered by those norms. Because international law requires states to provide an effective remedy for victims of human-rights violations, the argument goes, a nation’s courts are an appropriate vehicle to effectuate that requirement by shaping a remedy.
This view is flawed in two respects. As an initial matter, the question of who may be liable is not one of “remedy” to be decided under domestic law, but instead relates to the scope of substantive liability for the international norm. More fundamentally, even if U.S. domestic law may extend international law in creating a cause of action, that does not mean that the courts are the appropriate body within our tripartite system of government to effectuate such an expansion. When international law mandates that nations enforce a norm domestically, that implementation is to be effected through the lawmaking body within each nation – normally, each country’s legislature. Under our Constitution, Congress is the legislative body charged with effecting that implementation, as expressed in its power to “define and punish … Offences against the Law of Nations.” Thus, as the Supreme Court explained in Sosa v. Alvarez-Machain, when international law calls for domestic implementation, normally Congress should perform that role.
The judicial role is much narrower. Only norms so universally agreed upon and well-defined that they already are understood to give rise to international-law obligations may be imported into domestic common law and enforced by the courts. Federal common law does not simply import abstract norms and then allow the courts to make new causes of action; rather, it imports only those norms that already are understood to obligate each nation to provide a civil remedy – such that (1) the U.S. would be viewed as remiss in not recognizing a remedy in our courts; and (2) courts can enforce them without engaging in the essentially legislative task of defining the law of nations or breaking new ground in the area of private international-law rights of action before such claims are recognized by other nations. Although nations may go beyond international law to create and define new domestic causes of action and remedies for emerging international-law norms, our domestic separation-of-powers principles dictate that any such innovative lawmaking power be exercised by Congress, not by the courts.
Congress’ most prominent action in this area since the passage of the ATS and the related international-law statutes that accompanied it – the Torture Victim Protection Act – bears on this point about Congressional primacy in the area of implementing international law. In evaluating proposed international-law norms for potential enforcement through federal common law, courts must look to relevant Congressional guidance in the form of related or analogous legislation. The TVPA codified two types of claims that had been recognized as international law norms and did so by creating a direct cause of action only by an “individual” against another “individual” – not against artificial entities, as the Supreme Court confirmed in Mohamad v. Palestinian Authority. It cannot be said that declining to extend international-law norms would violate U.S. policy when Congress itself made the very same choice with respect to the only two international-law crimes for which it chose in the TVPA to create a domestic remedy.