Bloomberg News

Torture Suits Against Companies Blocked by Top U.S. Court

April 18, 2012

The U.S. Supreme Court limited the reach of a law that protects American citizens from torture in other countries, ruling that victims can sue only individuals, not organizations or corporations.

The justices unanimously threw out a suit filed against the Palestinian Authority and Palestine Liberation Organization by the relatives of Azzam Rahim, an American allegedly tortured and murdered in the West Bank during the 1990s.

The ruling is a prelude to a dispute the court will take up in its next term, when it will use a case involving Royal Dutch Shell Plc (RDSA) to consider the scope of a similar law that applies to non-citizens, the Alien Tort Statute.

Multinational companies have faced dozens of suits under the two laws accusing them of playing roles in human rights violations, environmental wrongdoing and labor abuses. Exxon Mobil Corp. (XOM:US), Coca-Cola Co. (KO:US), Pfizer Inc. (PFE:US), Unocal Corp., Chevron Corp. (CVX:US), Ford Motor Co. (F:US) and KBR Inc. (KBR:US) have all been sued.

In the Palestinian case, the central issue was a provision in the 1991 Torture Victim Protection Act that authorizes suits against “an individual” engaged in torture. The Supreme Court today upheld a lower court by saying that language excludes corporations or organizations such as the PLO and Palestinian Authority.

“The text of the TVPA convinces us that Congress did not extend liability to organizations, sovereign or not,” Justice Sonia Sotomayor wrote for the court. “There are no doubt valid arguments for such an extension. But Congress has seen fit to proceed in more modest steps in the act.”

Alien Tort Statute

The ruling doesn’t necessarily dictate how the court will rule on the Alien Tort Statute, which doesn’t include a similar reference to “an individual.” Sotomayor said the Alien Tort Statute “offers no comparative value here regardless whether corporate entities can be held liable” under that statute.

The high court heard arguments on both statutes in February, in each case focusing on whether individuals alone could be sued. A week later, the justices ordered a second hearing in the Alien Tort Statute case to consider arguments that the law can’t be applied overseas.

A ruling on that issue would potentially impose more sweeping limits on lawsuits, shielding corporate officers as well as the companies themselves. The justices will take up the matter in the nine-month term that starts in October.

The case acted on today is Mohamad v. Palestinian Authority, 11-88. The Alien Tort Statute case is Kiobel v. Shell Petroleum, 10-1491.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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