Politics

Supreme Court Shields Foreign Corporations From Human Rights Lawsuits

REUTERS/Aziz Taher

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Kevin Daley Supreme Court correspondent
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Arab Bank, a Jordanian financial institution that allegedly provided a range of services to Hamas during the Second Intifada, cannot be sued by foreign citizens in an American court, the U.S. Supreme Court ruled Tuesday.

The ruling means that foreign corporations cannot be sued in U.S. courts for human rights violations under a rarely litigated 1789 law called the Alien Tort Statute (ATS).

“With the ATS, the First Congress provided a federal remedy for a narrow category of international law violations committed by individuals,” Justice Anthony Kennedy wrote for a five-justice majority. “Whether, more than two centuries on, a similar remedy should be available against foreign corporations is similarly a decision that Congress must make.”

Kennedy’s opinion was joined by Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito, and Neil Gorsuch. Justice Sonia Sotomayor led a united liberal bloc in dissent.

The ATS gives federal courts power to hear cases brought by foreign citizens for violations of international law. The statute, as adopted by the first Congress, allowed only a limited range of claims, usually involving piracy or the security of foreign ambassadors.

Beginning in the 1980s, human rights activists sought to expand the ATS to encompass torture or slavery cases.

Tuesday’s case involved 6,000 foreign citizens seeking damages from the bank in a New York federal court for militant attacks. A 2013 Supreme Court decision requires that ATS cases have a significant connection to the U.S. The plaintiffs claimed to meet that standard because the bank cleared dollar-denominated payments to terrorists through its New York branch and funneled money to a Texas-based charity allegedly affiliated with Hamas called the Holy Land Foundation for Relief and Development.

In his opinion for the Court, Kennedy emphasized that the question of ATS corporate liability raises serious foreign policy considerations best left to the political branches, noting this particular case has adversely affected the U.S. relationship with Jordan, “a critical ally in one of the world’s most sensitive regions.” Arab Bank accounts for a significant portion of the Amman Stock Exchange’s market capitalization, meaning a massive civil verdict against the institution could wreak havoc in the Jordanian economy.

He connected this rationale with the court’s general aversion to creating or expanding new avenues for bringing lawsuits.

Kennedy elsewhere feared the creation of ATS corporate liability would deter investment in the developing world, particularly “where the host government might have a history of alleged human-rights violations.” Such cagey investing could hurt those venues most in need of foreign financial support.

The bank welcomed Tuesday’s decision.

“Arab Bank is pleased with the Court’s decision, which ends this litigation and affirms the bank’s belief that there is no basis to hold corporations liable under international law,” a spokesperson said. “The bank looks forward to focusing its full attention on its business, its commitment to safe and sound banking and its dedication to the service of its customers across the globe.”

In dissent, Sotomayor chided the court for extending First Amendment rights to corporations in the Citizens United and Hobby Lobby decisions, while protecting them from civil accountability.

“It allows these entities to take advantage of the significant benefits of the corporate form and enjoy fundamental rights without having to shoulder the attendant fundamental responsibilities,” she wrote.

Disclosure: The author’s fiancee is employed by a firm involved in this litigation.

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