New York, N.Y., April 17, 2013 – The United States Council for International Business (USCIB), which champions the interests of U.S. global companies, hailed today’s ruling by the U.S. Supreme Court largely insulating companies from lawsuits under the Alien Tort Statute (ATS), an 18th-century law used in recent years by activists to lodge numerous suits alleging corporate complicity in human rights abuses overseas.
“After many years of sounding the alarm against abuse of the ATS, we are extremely gratified that the court has handed down such a clear and well reasoned ruling,” stated USCIB President and CEO Peter M. Robinson. “The justices have essentially shut the door to further use of the Alien Tort Statute to target companies based on alleged activity without any clear connection to the United States.”
The court unanimously upheld a lower court’s ruling dismissing a lawsuit accusing two foreign-based units of Royal Dutch Shell Plc of aiding and abetting human rights abuses in Nigeria, although the justices differed in the details of their reasoning. The majority said the ATS generally should not apply to conduct beyond U.S. borders.
Writing for the majority, Chief Justice John Roberts wrote that in the case, Kiobel v. Shell Petroleum, “all of the relevant conduct took place outside the United States.” The justices were unanimous on the outcome in the Shell case, but issued differing opinions explaining their reasoning. Roberts’s opinion cited a “presumption against extraterritoriality,” saying that legal principle limits the reach of the Alien Tort Statute when it comes to conduct overseas. Four justices issued a separate opinion saying they would have reached the same result using different reasoning.
For over a decade, USCIB and other business groups have warned against abuse of the ATS as a vehicle to lodge spurious lawsuits against companies over allegations of conduct that often bore little, if any, connection to the United States. In some cases brought under the ATS, there has been little connection to any corporate activity whatsoever, with companies having operations in a country effectively serving as stand-ins for governments alleged to have committed abuses.
More broadly, business has expressed concern over the extraterritorial application of national laws in general, including in the area of human rights, and has called for clearer international human rights standards and better enforcement of national laws as an alternative. USCIB joined in filing an amicus brief in support of Shell in the Kiobel case.
USCIB Vice Chairman Thomas Niles, a retired U.S. ambassador and former president of USCIB, wrote an influential 2002 op-ed in the Financial Times complaining about abuse of the statute and urging U.S. courts to curtail its use.
“Business and legal experts have argued for years that the ATS should not be interpreted as providing grounds for suits against companies, especially where the alleged actions have no connection to the United States,” Niles said. “We are glad that the Supreme Court took the time to review both the specifics of the Kiobel case as well as the broader issue of extraterritoriality, and needless to say we agree with the justices’ ruling.”
USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world. With a unique global network encompassing leading international business organizations, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More at www.uscib.org.
Jonathan Huneke, USCIB
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