For those who are unfamiliar with it, the Alien Tort Statute has previously been engaged to hold private actors, including corporations, liable for international crimes committed outside of the United States. Since the revival of this 200+ year old piece of legislation in the 1980s against a Paraguayan ex-policeman in the case of Filartiga it seems that its scope of application was set to continually grow and capture an ever-increasing range of defendants – the floodgates had been opened. However, the first time a claim under the ATS reached the Supreme Court in 2011, the Supreme Court put a spanner in the works by finally reversing a decision by a lower court holding the defendant liable and upholding the presumption against extraterritoriality. That is, the assumption of jurisdiction and application of US domestic law to events outside of its national borders. Even “better” for the business community was that the case involved a corporation as the defendant.
However, the position for corporations remains unclear. There is still potential for Courts to assume extraterritorial jurisdiction under the ATS, and, more specifically, there is still potential for corporations to fall within its reach. Such would be the implication of a more recent decision by a Californian Court of Appeal.
The claim in Doe I v Nestle was brought by a group of former child slaves who were forced to harvest cocoa in the Ivory Coast against chocolate brand owning multinationals, including Nestle. The plaintiffs alleged that the defendants had aided and abetted child slavery by providing assistance to Ivorian farmers.
In September 2014, the majority reversed the District Court’s dismissal of the action.
The Decision reaffirmed three principles about corporate liability under the ATS:
- There is no categorical rule when it comes to corporate liability – the analysis continues to be on a norm-by-norm basis
- Corporate liability under the ATS does not depend on an international precedent enforcing legal norms against corporations
- Norms that are universal and absolute and therefore applicable to all actors can provide a basis for an ATS claim against a corporation
It was held that in a case of corporate liability, courts must look:
- firstly to international customary law and the nature and scope of the norm underlying the claim; and
- then to domestic tort law to determine to consequence of the breach and e.g establish whether recovery of damages from the corporation is possible under the circumstances.
It was left open for the District Court to determine whether liability could be imposed under domestic tort law.
The applicable standard for aiding and abetting allegations continues to be an uncertainty for business. The court held that customary international law and not domestic law informs the legal standard for aiding and abetting allegations under the ATS, but left open what standard of intent needed to be met – whether mere knowledge suffices or purpose must be shown.
Either way the majority decided that the more stringent standard of purpose was met in this case. Purpose was inferred from the following:
- The Defendants’ priority was maximised revenues and reducing the price of cocoa at all costs, including basic human welfare. They obtained a direct benefit from the commission of a violation of international law and continued to provide money, equipment, and training to Ivorian farmers knowing how the market operates and that this would facilitate the continued use of child slavery.
- The Defendants had sufficient control over the Ivorian market and could have acted to stop or limit the use of child slavery in cocoa production but they did not use their leverage to this end.
- The Defendants’ lobbying efforts against the introduction of legislation requiring imported chocolate to be certified and labelled as ‘slave free’.
In addition to determining the consequences of corporate liability, two further questions remain for the District Court who has been ordered to allow the plaintiffs to amend their complaint in light of developments in Kiobel II:
- whether the assistance to the Ivorian farmers was substantial and specifically directed at the commission of the crime
- whether following Kiobel II extraterritorial application of the law is not permissible
The Court does provide some commentary around these two points stating that:
- in many cases precedent is moving towards causal link over specific direction; and
- in Kiobel all the relevant conduct took place outside the US and the only connection of the corporation with the US was its operational presence. In contrast, in this case, actions such as lobbying and certain decisionmaking give this case greater connection to the US.
The final outcome of this case remains to be seen. However, this decision demonstrates the real risk to businesses that aggressively pursue profit above anything else. It also demonstrates the court’s willingness to adopt a flexible approach and to look at value chains as a whole in order to identify where there is knowledge and leverage to assign responsibility, at least in the case of gross human rights abuses such as child enslavement. This flexible, case-by-case approach lacking a categorical rule leads to further uncertainty for business.
As it stands, decisions under the ATS can still result in corporate liability and so businesses operating in the US would be advised to hedge their bets.
Moreover, globally legal requirements regarding human rights are growing, including in the UK and EU. In order to avoid the risk of falling into noncompliance with the law, adequate human rights checks and controls must be in place.
One would hope that all business personnel should want to take the necessary steps to avoid having any involvement in human rights abuses, but, if anything, robust due diligence may also act as a potential defence to a legal claim or an accusation of complicity in such cases.