Bloomberg News

Human-Rights Suits May Be Limited in Top Court Shell Case

October 01, 2012

U.S. Supreme Court justices suggested they will shield companies from some suits alleging complicity in overseas atrocities, as the court debated how far to go in scaling back a favorite legal tool of human-rights advocates.

During arguments in Washington on accusations that two foreign-based units of Royal Dutch Shell Plc (RDSA) facilitated torture and execution in Nigeria, the justices today questioned whether American courtrooms were the proper site for such claims. The case centers on the two-century-old Alien Tort Statute.

“Why does this case belong in the courts of the United States when it has nothing to do with the United States other than the fact that a subsidiary of the defendant has a big operation here?” Justice Samuel Alito asked, as the court heard the first case of its new nine-month term.

A ruling cutting back the Alien Tort Statute would be a coup for companies, dozens of which have faced suits under the law in recent years. Exxon Mobil Corp. (XOM:US), Coca-Cola Co. (KO:US), Pfizer Inc., Unocal Corp., Chevron Corp. (CVX:US) and Ford Motor Co. have all been sued under either the Alien Tort Statute or a related law, known as the Torture Victim Protection Act.

Trimming the Statute

By the end of the hour-long session, the focus of the debate was how far the court should go in trimming the Alien Tort Statute. Some justices suggested they would continue to allow suits against alleged perpetrators who took refuge in the U.S., while the Obama administration urged the court to bar claims against foreign units -- and throw out the Shell case -- without deciding whether U.S. companies could be sued.

Human-rights advocates say a victory at the high court for Shell, based in the Hague, Netherlands, would undermine the ability of atrocity victims to hold their perpetrators accountable.

“This law is incredibly important,” said Katie Redford, co-founder of EarthRights International, an environmental and human rights group that filed a court brief supporting a group of Nigerians who sued, in a statement. “It makes corporations think twice before they cut corners and curb human rights standards to improve their bottom line.”

Lawyers who represent corporations say such a ruling is long overdue. Lawsuits under the Alien Tort Statute have been “sucking up huge resources of lots of companies,” Andy Pincus, a Washington lawyer who has represented companies and the U.S. Chamber of Commerce on the issue, said last week.

Second Argument

The justices were hearing arguments for the second time on the suit, being pressed by Nigerians who say two Shell units were complicit in torture and execution in the country’s Ogoni region from 1992 to 1995.

The high court in February considered contentions that the Alien Tort Statute doesn’t permit suits against corporations. Several justices, including Alito, suggested then that they were more interested in hearing arguments that the law can’t be applied overseas.

The justices then expanded their review, ordering re- argument on a potentially more sweeping question: whether the statute applies beyond the U.S. borders. A decision limiting the law to misconduct on U.S. soil would shield corporate officers as well as the companies.

The 33-word statute, enacted in 1789, was in part a reaction to an attack on a French diplomat in Philadelphia. The Alien Tort Statute then lay largely dormant for almost two centuries before being revived in the 1970s as a means of pressing human-rights lawsuits.

1980 Ruling

A 1980 federal appeals court ruling allowed use of the law by two Paraguayan citizens against a former Paraguayan police chief who had moved to the U.S.

Several justices, including Anthony Kennedy, today suggested they weren’t interested in undercutting the 1980 decision. That would limit the scope of any ruling in the Shell case, perhaps barring suits against foreign-based corporate units while allowing other types of claims.

Paul L. Hoffman, the lawyer for the Nigerians who sued, told the court that “the trend in the world today is toward universal justice for people that -- and corporations that -- violate these kinds of norms.”

The court’s Republican-appointed justices suggested they weren’t comfortable with that approach. Kennedy said Hoffman’s position would give other countries license to adjudicate claims involving alleged wrongdoing against U.S. corporations.

Any Court

Under Hoffman’s approach, “if a U.S. corporation commits an international law violation in the United States, that U.S. corporation can be sued in any court in the world,” Kennedy said.

Shell’s lawyer, Kathleen Sullivan, urged the court to issue a sweeping decision that would categorically bar suits for conduct that occurs beyond the U.S. borders. The U.S. shouldn’t impose “our law onto foreign countries,” she said.

Justice Elena Kagan asked Sullivan whether the court shouldn’t permit such suits in at least some contexts. Kagan described a hypothetical assault by an American on a French ambassador in London.

“Wouldn’t the ATS have contemplated exactly that sort of action?” Kagan asked. “I mean, why would it make any difference whether the attack on the French ambassador by a United States citizen occurred in Philadelphia or occurred in London?”

At another point, Kagan asked whether plaintiffs should have to first try to sue in countries with a closer connection to the alleged wrongdoing. In the Shell case, that would include the U.K. and the Netherlands, where the two units are based, she said.

Obama Argument

U.S. Solicitor General Donald Verrilli, representing the Obama administration, urged the court to rule in Shell’s favor without reaching some of the broader questions. He said the court should leave intact the 1980 decision that allowed suits against perpetrators who had moved to the U.S.

Justice Stephen Breyer offered some support for the Nigerian plaintiffs. He pointed to the prospect that, at the time it was passed, the law would have allowed suits against pirates.

“If, in fact, an equivalent torturer or dictator who wants to destroy an entire race in his own country is not the equivalent of today’s pirate, who is?” Breyer asked.

The 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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