Justices back Royal Dutch Shell in landmark human rights case

The Supreme Court ruled today that foreigners may not bring lawsuits in U.S. courts against corporations for human rights violations occuring abroad.

Justices held that the Alien Tort Statute did not apply to the conduct of foreign companies overseas.

The case, Kiobel v. Royal Dutch Petroleum Co., was one of the most high-profile human rights cases before the court in recent years. It was brought by Nigerian plaintiffs who protested the environmental impact of Royal Dutch Shell's operations in Nigeria's Ogoni region. They charged that Shell aided and abetted the Nigerian government during a crackdown in the 1990s that included several human rights violations.

The case, one of the first heard by the court this year, has been closely watched by environmental and human rights groups.

In a ruling that could have a broad impact on human rights law, Chief Justice John Roberts, writing for a five-member majority, held that there is a "presumption against extraterritoriality" that applies to claims brought under the 1789 Alien Tort Statute, or ATS.


Roberts said the alleged abuses at issue fall outside the parameters of U.S. jurisdiction.

"[A]ll the relevant conduct took place outside the United States," he said. "And even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application."

Roberts also said there is a high bar to be met in order for the statute to apply to corporations.

"Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices," he said. "If Congress were to determine otherwise, a statute more specific than the ATS would be required."

Roberts' opinion was joined by the conservative wing of the court -- Justices Antonin Scalia, Clarence Thomas and Samuel Alito -- and Justice Anthony Kennedy, the usual swing vote. Kennedy filed a separate opinion adding that open questions remain about the "reach and interpretation" of the ATS.

The court's liberal wing concurred with the majority's judgment in favor of the Anglo-Dutch company but disagreed with Roberts' invoking of the presumption against extraterritoriality.

Justice Stephen Breyer said the presumption need not apply and set out a criteria for when ATS cases are eligible for court consideration. Breyer said a case would qualify if the alleged abuse occurred on U.S. soil, the defendant was a U.S. national, and the conduct substantially and adversely affected an important national interest.

Those standards were not met in this case, he wrote, as Royal Dutch Shell is a foreign corporation and the violations took place abroad.

In an unusual twist, the Supreme Court heard arguments in the case twice. In February 2012, the court was to consider whether a corporation can be held liable under the ATS, a law enacted in the first Congress.

Justices then ordered another round of arguments in October to consider the broader question of whether that law was intended to encompass U.S. courts considering foreign violations carried out by foreign perpetrators (Greenwire, Oct. 1, 2012).

Impacts to ATS cases

The court today seemed to sidestep the issue that first caught its attention: whether corporations can be liable in U.S. court for violations abroad, said John Knox, a Wake Forest University School of Law professor.

Knox, a former State Department attorney who has been appointed by the U.N. Human Rights Council to study the intersection of international humans rights and environmental law, called that aspect of the ruling "really curious."

He added that he was surprised the ruling focused solely on the presumption of extraterritoriality. Roberts, he said, carved out an exception to the presumption for piracy but didn't touch on other issues.

"It's an in-between situation," Knox said. "They are saying the presumption is overcome [by] piracy but not enough to apply to anything else."

The case will have a major impact on ATS law, he said. Currently, there are other ATS cases on hold at the Supreme Court, including high-profile lawsuits involving mining giant Rio Tinto PLC and Exxon Mobil Corp. Those companies will likely move for immediate dismissal of both cases in light of today's ruling.

After that, it remains to be seen whether there are any foreign human rights abuses that would qualify under Roberts' standard, Knox said.

"This is going to cut a wide swath through ATS litigation," Knox said. "Are there cases where plaintiffs can meet the extra bar? Maybe with some conduct taking place in other countries and others here? Or on the high seas?"

Stanford Law School professor Chip Pitts added that the ruling also puts the United States at odds with much of the international community, which is looking for legal solutions for human rights violations that in many instances cannot be tried in the country where they occurred.

The court is "taking a firm stand against the line of meaningful remedy," he said. "It's retreating to a very narrow concern with sovereignty."

He added that the ruling is "unfortunate" and said he expects the international community will turn to legislative solutions.

The U.S. Chamber of Commerce, however, applauded the ruling, saying that it struck back at a "scheme" used by class action lawyers.

"The U.S. Supreme Court's decision today ensures that trial lawyers cannot continue to use the American judicial system to expose global businesses to frivolous and costly lawsuits," chamber President Thomas Donohue said in a statement.

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