In Shell win, ruling limits jurisdiction in foreign rights cases

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Published April 17, 2013

| Reuters

In a closely watched ruling that left questions unanswered, the Supreme Court said on Wednesday that federal courts do not have jurisdiction to hear lawsuits against foreign corporations accused of aiding in human rights abuses abroad.

In one of the court's biggest human rights cases in years, the justices ruled unanimously that a federal court in New York could not hear claims made by 12 Nigerians who accused Anglo-Dutch oil company Royal Dutch Shell Plc of complicity in a violent crackdown on protesters in Nigeria from 1992 to 1995.

The ruling immediately sparked another debate, not least in concurring opinions written by justices in response to Chief Justice John Roberts' majority opinion, about exactly what claims can still be made under the Alien Tort Statute. The 1789 law had been dormant for nearly two centuries before lawyers began using it in the 1980s to bring international human rights cases in courts.

What is clear is that the ruling is a major win for such non-U.S.-based multinational companies as Royal Dutch that do business in the developing world and become embroiled in local political controversies. Those companies, which are still subject to suit in foreign courts, fear U.S. courts because of the possibility of large damage awards.

The decision also means that U.S. corporations could find it easier to defend themselves against similar types of claims, although it could depend on the extent to which the alleged conduct was directed from the United States.

The ruling is likely to affect other cases, including those involving similar claims against Anglo-Australian mining giant Rio Tinto Plc over its conduct in Papua New Guinea and against Exxon Mobil Corp over its activity in Indonesia.

Esther Kiobel, the named plaintiff in the Royal Dutch case and now a U.S. citizen, brought her lawsuit in 2002 on behalf of victims of the crackdown in Nigeria, including her husband, Barinem, who was executed in 1995.

Chief Justice Roberts in the majority opinion wrote that a presumption against extraterritorial application of federal laws applies to the Alien Tort Statute.

The court did not decide the question originally before it in the case: whether corporations can ever be liable under the statute.

DIFFERENCES OF OPINION

Although all nine justices concurred with the outcome, only four agreed with the chief justice's reasoning. Justice Stephen Breyer wrote a separate opinion in which he was joined by three other justices.

"Nothing in the text of the statute suggests that Congress intended causes of action recognized under it to have extraterritorial reach," Roberts wrote.

He also said the ruling leaves open some lawsuits under the Alien Tort Statute, including against corporations, as long as there is a sufficient connection with the United States. The claims must have "sufficient force to displace the presumption" against extraterritorial application, he added.

Addressing liability of companies that are either based in the United States or have considerable interests there, Roberts said, "It would reach too far to say that mere corporate presence suffices."

Justice Anthony Kennedy and Justice Samuel Alito wrote separately in agreement with Roberts, with both making clear that the court had not resolved for good the question of under what circumstances individuals and corporations can be liable.

In his concurring opinion, Justice Breyer said he would not have applied the presumption against extraterritoriality. Regardless, he said, in the Shell case, "The parties and relevant conduct lack sufficient ties to the United States."

Sandy Weisburst, one of Royal Dutch's lawyers at Quinn Emanuel Urquhart & Sullivan, said the ruling was a "vindication of Shell's primary position in this case." Future cases against other defendants would, he said, determine "when is there sufficient U.S. conduct" to give U.S. court's jurisdiction.

Paul Hoffman, the lawyer representing the plaintiffs, said it "seems pretty clear" that corporations are covered by the statute and "there will be corporate cases in the future" in some circumstances.

Marco Simons, a lawyer with Earthrights International who represents plaintiffs in human rights cases, said that although it was clear a presumption against extraterritorial application would now apply, the court is not "suggesting that no cases can be brought where abuses happened abroad."

He noted one of his group's own cases, against Chiquita Brand International, in which plaintiffs claim that the company made decisions in the United States about funding paramilitaries in Colombia, as a possible example of a claim that could go forward because there was a sufficient U.S. nexus.

That case is currently before the Atlanta-based 11th U.S. Circuit Court of Appeals. John Hall, a lawyer for Chiquita, declined to comment, saying he had not had a chance to review Wednesday's ruling.

Rio Tinto's appeal of a ruling in favor of the plaintiffs in the San Francisco-based 9th U.S. Circuit Court of Appeals is pending before the Supreme Court, as is a separate appeal from the same court brought by Daimler AG concerning alleged abuses in Argentina. In the Exxon case, the U.S. Court of Appeals for the District of Columbia Circuit held off on deciding whether to rehear it while the Shell case was pending.

The case is Kiobel v. Royal Dutch Petroleum Co, U.S. Supreme Court, No. 10-1491.

(Reporting by Lawrence Hurley and Jonathan Stempel; Editing by Howard Goller, John Wallace, Steve Orlofsky and Cynthia Osterman)

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