Volume 100 -- Issue 6 Georgetown Law Journal

Corporate Liability for Extraterritorial Torts Under the Alien Tort Statute and Beyond: An Economic Analysis

Recent years have witnessed an enormous increase in litigation against corporate defendants under the U.S. Alien Tort Statute (ATS). The typical case alleges corporate involvement in egregious conduct that violates international law in a developing country, usually some branch of human rights law. Some- times agents of the corporation itself are alleged to have engaged directly in the wrongful conduct, but much more commonly the corporation is alleged to have “aided and abetted” wrongful conduct by foreign governments.

Although the ATS dates back to 1789, litigation against corporate defendants is a phenomenon of the past thirty years. In the earliest cases, a key recurring issue was the scope of the substantive claims actionable under the ATS. When the defendant was a corporation, courts generally assumed, with little or no discussion, that corporate liability was available under the ATS as long as the conduct that some corporate agent was alleged to have engaged in fell under the statute. In several recent cases, however, courts have reexamined this assump- tion. The Second Circuit, in Kiobel v. Royal Dutch Petroleum Co., concluded that corporations cannot be held liable under the ATS, although the Seventh, Ninth, Eleventh, and D.C. Circuits disagree. The Supreme Court granted certiorari in Kiobel in the fall of 2011. At the oral argument in February 2012, the Court focused on an additional question—the extraterritorial application of the ATS. This issue, too, has been ignored in most lower court decisions and by the Supreme Court itself in Sosa v. Alvarez-Machain. But in Doe v. Exxon Mobil Corp., the D.C. Circuit decision that rejected Kiobel on the corporate liability issue, Judge Kavanaugh argued forcefully in dissent that the ATS should not apply to the extraterritorial conduct in question. In the Ninth Circuit, Judge Kleinfeld also argued against extraterritorial application of the statute in his dissent in Sarei v. Rio Tinto, PLC. The issue resurfaced in the initial oral argument before the Supreme Court in Kiobel, and the Court has now asked for the case to be re-argued next term with the extraterritoriality issue squarely on the table.

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