Alien Tort Statute Uncertainty in the light of Jesner v. Arab Bank

The United States of America’s Alien Tort Statute (hereon referred to as ATS) refers to 28 U.S.C.§ 1350, drafted in 1789, which essentially aims at providing federal district courts universal jurisdiction over violations of international law. A non-US citizen, under this act, can file for torts in violation of international law, particularly with regards to a treaty that the USA is a party. For the most part, especially since signing the Universal Declaration of Human Rights, this statute has been used to address human rights abuses, which gave the regulation, one previously regarded as somewhat archaic, renewed significance in the modern age. Today, the Alien Tort Statute provides survivors of such abuses, wherever committed, the right to sue the perpetrators in the United States. Naturally, this is a valuable notion, particularly if the jurisdiction where such egregious acts took place has a struggling judicial system. Since the 1980s, the ATS has been used in torture, state-sponsored sexual violence, extrajudicial killing, crimes against humanity, war crimes and arbitrary detention cases.

In recent times, however, the ATS has seen spiking relevance in the corporate sphere, particularly regarding foreign corporations alleged to have committed heinous human rights violations. It is a controversy primarily heralded by the Supreme Court’s 2018 decision in the Jesner v. Arab Bank, PLC case, which led to significant confusion regarding the power of the ATS over both foreign and domestic companies that often receive immense monetary gain from the abuse they partake.

Jesner v. Arab Bank: An Overview of Corporate Facilitated Terrorism

It is imperative to briefly present a background of the case that shook up the ATS scene. Essentially, the petitioners (as non-US citizens) filed suits under the ATS, alleging that they or their relatives were victims of terrorist attacks committed in Israel, the West Bank, and Gaza between 1995 and 2005. They claimed that the respondent facilitated these acts; Arab Bank, PLC, a Jordanian financial institution with a New York branch. The petitioners primarily sought the imposition of liability on the bank for the actions of its high-ranking employees. They claimed that its New York branch cleared dollar-denominated transactions that benefited terrorists through the Clearing House Interbank Payments System (CHIPS) and launder money for a Texas-based charity allegedly affiliated with Hamas.

The court held that foreign corporations could not be defendants in suits brought under the ATS, based on the notion that courts cannot make the policy judgments required when dealing with foreign corporate liability. Judicial caution, as expanded upon in the 2004 case of Sosa v. Alvarez-Machain, guards against courts making decisions that would likely have intense foreign policy implications, deferring such decisions to Congress, upholding the doctrine of separation of powers. Following this reasoning, the SC refused to extend ATS liability to foreign corporations/entities.

Implications of the Decision and the Choice of Law

Something interesting to note is that the Justices involved in the case provided additional reasoning for what would then become the majority opinion as explicated above. Justice Kennedy, for example, wrote, “If the Court . . .[held] that foreign corporations have liability for international-law violations, then plaintiffs may well ignore the human perpetrators and concentrate instead on multinational corporate entities.”

After all, Kennedy noted, “plaintiffs still can sue the individual corporate employees responsible.” The issue with the public reiteration of this statement: the ability of a non-US national to sue individuals under a corporate structure led to a surge in suits against corporate officers. If, in the light of Jesner, foreign corporate entities can no longer be held liable under the ATS, what happens to domestic corporations found within similar contexts?

The problem is that there does not exist a solid answer to that question. The Jesner decision essentially threw the practical application of the ATS concerning international corporate torts into a whirlwind of uncertainty. The only way for a non-citizen plaintiff to develop an actionable suit under the ATS would be to sue individual officers. While one could argue that indemnification policies often lead to corporations covering damages on behalf of their employees, suing a corporate officer raises far more complications. These complications would not be of consequence if the respondent were a corporate legal entity. It makes it far more complicated for international plaintiffs that have suffered harm due to domestic corporate abuse abroad to obtain any legal remedy since they find themselves in situations where questions of choice of law, personal jurisdiction, and standards for aiding and abetting liability are thrust into a quandary.

Choice of law has always been a prominent issue arising in ATS cases for obvious reasons, as a procedural part of litigation covering the conflict of jurisdictional laws across areas. Naturally, a statute addressing torts involving foreign nationals would exacerbate this conflict ten-fold. For a long time, ATS has been the best (and only) way to address international human rights abuse within the American judicial system. The incorporation of the idea that only corporate individuals can be named respondents, in light of the Jesner decision, combined with the general uncertainty caused by SC-sponsored limitations on the statute’s jurisdiction, means that outcome determination when suing under ATS, an incredibly high stakes, complicated, and the expensive process becomes impossible. It puts potential plaintiffs at a significant disadvantage, utterly at odds with the original objective behind the statue’s creation.

The Road Ahead

The decision in Jesner of denying liability under ATS for foreign corporations has already negatively impacted ATS litigation. Human rights plaintiffs seeking to sue for corporate-sponsored violations will likely end up naming individual corporate officers. At the same time, external issues of law involving the choice of law conflicts will work to make the outcome of such a case extremely uncertain. The only way to address such uncertainty would be for federal courts to develop a fair, reasonable, straightforward test to determine whether or not torts committed by international corporations could be placed under American litigation standards, bringing clarity to those who seek justice under the statute.

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