Tag Archive | "Alien Tort Statute"


RICO Did Not Intend to Rebut the Presumption Against Extraterritoriality

Photo Credit: AP Photo

On June 20, 2016, the Supreme Court of the United States handed down its opinion in RJR Nabisco, Inc. et al. v. European Community et al., recognizing that in some cases the Racketeer Influenced and Corrupt Organizations Act (“RICO”) may have extraterritorial application. The Court further held that in order to bring a private cause of action, RICO requires that the plaintiff allege an injury to business or property suffered on U.S. territory. Since its enactment in 1970, RICO has become a powerful tool designed to fight organized crime. It allows for prosecution and civil causes of action for racketeering activity, such as fraud, embezzlement, money laundering or unfair trade practices.

To assert a civil claim under RICO, a plaintiff must establish that the defendant engaged in a pattern of racketeering activity connected to an enterprise. Furthermore, if a plaintiff successfully proves the defendant utilized an “enterprise” to commit racketeering, the plaintiff is entitled to recover treble damages and attorney’s fees. RICO prohibits any person from participating in a racketeering activity “to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.” 18 U.S. Code § 1962 (b).

Pursuant to the statute, the term “enterprise” consists of “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” Id. § 1961(4). The statute provides a long and broad list of offenses that constitute “racketeering activity” (also known as predicate acts), such as mail and wire fraud, counterfeiting, murder, kidnapping, gambling, robbery, bribery, and extortion. An enterprise is generally held liable under the statute if it engages in two or more predicate acts of racketeering.

RICO has also been utilized by many plaintiffs as a vehicle for transnational litigation. Although the statute provides detailed information on what constitutes racketeering activity, neither legislative history nor the statute itself clearly indicates whether Congress intended to extend RICO’s coverage beyond U.S. territory. The Supreme Court addressed the question of RICO’s extraterritorial reach in its decision in RJR Nabisco.

In RJR Nabisco, the European Community and twenty-six of its member states filed a claim in the United States District Court for the Eastern District of New York, in 2000, alleging that the RJR Nabisco (former food and tobacco giant) (“RJR”) violated RICO by participating in an international money laundering scheme, providing material support to foreign terrorist organizations, and engaging in mail fraud, wire fraud and Travel Act violations. The European Community alleged that the money laundering scheme consisted of several transactions: foreign drug traffickers smuggled narcotics into Europe and sold them for euros that were then traded for other foreign currencies and subsequently used to purchase cigarettes from cigarette wholesalers, who in turn laundered the money by purchasing the cigarettes from RJR and shipped those cigarettes into Europe. These activities, the plaintiffs claimed, harmed European governments in various ways, including loss of tax revenues and increased law enforcement costs. The Eastern District of New York dismissed the complaint, holding that “RICO is silent as to any extraterritorial application” of the statute to actions that took place abroad.

The Second Circuit reversed the District Court’s decision, concluding that Congress had clearly manifested an intent for RICO to apply extraterritorially in these circumstances. The court reasoned that “RICO applies extraterritorially if, and only if, liability or guilt could attach to extraterritorial conduct under the relevant RICO predicate,” and, because predicate offenses, such as money laundering and providing material support to foreign terrorists, applied extraterritorially, Congress intended for RICO to apply extraterritorially as well.

The Supreme Court granted certiorari on the issue of whether RICO applies extraterritorially. The Court noted that generally there is a legal presumption against extraterritorial application of U.S. laws. In other words, unless Congress has clearly expressed a contrary intent, federal statutes can only be enforced on U.S territory. Therefore, to decide whether RICO applied extraterritorially, the Court utilized a two-part analysis. Under the two-part analysis, the court must first determine whether there is an indication that Congress intended for the statute to create a private right of action for foreign injuries. If there is no such intent, the Court should apply the second part of the test, which examines, whether the statute’s private right of action applies to business or property injuries and damages suffered in foreign countries.

The Court found that by incorporating some of the predicate offenses involving foreign conduct into the Statute, Congress gave a clear indication that RICO’s substantive provisions were intended to apply extraterritorially. The Court was careful to note that “[t]he inclusion of some extraterritorial predicates does not mean that all RICO predicates extend to foreign conduct.” In analyzing the second part of the test, the Court concluded that because the alleged injuries to business or property occurred outside of the United States, RICO’s private right of action does not overcome the presumption against extraterritoriality.

The Supreme Court’s holding in RJR Nabisco was not surprising in light of prior decisions. Since 2010, the Court has issued several rulings which limited the extraterritorial application of several U.S. statutes, including the Alien Tort Statute, the Torture Victim Protection Act, and the Securities and Exchange Act. A brief summary of two cases, Kiobel v. Royal Dutch Petroleum Co. and Morrison v. National Australia Bank Ltd., provided below, examine the facts and reasoning behind the Supreme Court’s decisions to limit the extraterritorial application of the Alien Tort Statute and the Securities and Exchange Act.

  1. Morrison v. National Australia Bank Ltd.

On June 24, 2010, in Morrison v. National Australia Bank Ltd., the Supreme Court concluded that claims under § 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) are not available for securities purchased on foreign stock exchanges.

In Morrison, National Australia Bank Limited (“National”), a foreign bank whose shares were traded on foreign securities exchanges, purchased HomeSide Lending, Inc. (HomeSide), a U.S. – based mortgage servicing company. Sometime between 1998 and 2001, National and HomeSide overstated the value of HomeSide’s mortgage-servicing rights. The inflated values were disseminated through National’s financial statements. These financial statements represented to the public that the mortgage servicing company was a success. After National announced that the valuation model was incorrect, a group of the bank’s international shareholders (who bought their shares on foreign securities exchanges) brought lawsuit against both National and HomeSide in the U. S. District Court for the Southern District of New York, claiming violations of §10(b) of the Exchange Act. § 10(b), also referred to as the anti-fraud provision, makes it unlawful for any person “to use or employ, in connection with the purchase or sale of any security… any manipulative or deceptive device or contrivance” that would violate the rules and regulations prescribed by the Securities and Exchange Commission. The District Court dismissed the complaint for lack of subject-matter jurisdiction. The Second Circuit Court of Appeals affirmed the District Court’s ruling. The Supreme Court granted certiorari to decide whether U.S. courts had jurisdiction over private claims pursuant to §10(b) of the Exchange Act.

For the first time, the Court addressed the question of “foreign cubed” cases brought by foreign plaintiffs against a foreign company in relation to a transaction that took place outside of the United States. The Court held that §10(b) does not apply to transactions in securities listed on foreign exchanges. The Court further held that the presumption against extraterritoriality prohibited domestic courts from extending U.S. securities laws beyond U.S. soil. The Court reasoned “[i]t is a longstanding principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States[…] When a statute gives no clear indication of an extraterritorial application, it has none.”

  1. Kiobel v. Royal Dutch Petroleum Co.

On April 17, 2013, the Supreme Court issued a landmark decision in Kiobel v. Royal Dutch Petroleum Co., holding that a presumption exists against extraterritorial application of the Alien Tort Statute (“ATS”). For many years, ATS allowed foreign citizens to sue other foreign citizens in the United States for the violations of international law that occurred abroad.

The Kiobel Court ruled that ATS does not generally permit claims based on illegal conducts that took place outside of the United States. The Court explained that in order to overcome the presumption against extraterritoriality, it is necessary that the alleged violations “touch and concern the territory of the United States” with “sufficient force.”

In Kiobel, a group of plaintiffs, residents of the Ogoni region of Nigeria, brought a lawsuit against British, Dutch, and Nigerian oil corporations alleging that the companies aided and abetted the Nigerian government in committing crimes against humanity. The Supreme Court granted certiorari on the question of corporate liability; however, the Court then shifted its focus to the question of the ATS’s extraterritorial application. The Court noted that the statute does not apply extraterritorially unless the legislature explicitly indicated otherwise. After examining the text, history, and purpose of the ATS, the Court concluded that nothing in the text of the statute suggests an intended extraterritorial reach. Further, the Court concluded that ATS claims must “touch and concern” the United States with “sufficient force” to displace the presumption against extraterritoriality.

The opinions in these three cases are reasonable because the Court was trying to limit the jurisdictional overreach of U.S. laws. By curtailing the extraterritorial scope of the ATS and RICO, the Court intended to eliminate the risk of imposing U.S. laws on conduct that occurred within the jurisdiction of a foreign country. Moreover, the Court’s decisions are consistent with the universally acknowledged concept of sovereign equality, which requires mutual respect for the sovereignty and national identity of all States.


Jeyla Zeynalova is a staff editor on the Denver Journal of International Law & Policy.

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Kiobel and the Future International Human Rights

The recent United States Supreme Court decision dismissing all the plaintiffs’ claims in Kiobel v. Royal Dutch Petroleum has drawn attention and mixed reactions from the international human rights community.  The Kiobel decision closed the shop for foreign plaintiffs suing foreign defendants for alleged torts committed abroad.

Many international scholars, such as Second Circuit Judge Pierre N. Leval, worry that prohibiting ATS claims that do not touch and concern the United States will be a devastating blow to the human rights movement.  Others, like Columbia history professor Samuel Moyn, hope the decision will be a blessing in disguise because it will shift focus to bigger picture solutions rather than “quick fixes” by the courts. 


Protesting Shell at SCOTUS

I think you mean “Shame on the Supreme Court.”
(Washington Post)

The Kiobel case was brought by residents of Ogoniland in the Niger Delta area of Nigeria.  The plaintiffs alleged that after residents of the region began protesting the harmful environmental effects of the defendant corporations’ oil exploration and production practices, those corporations enlisted the Nigerian government to suppress the demonstrations.  According to the plaintiffs, the Nigerian military and police forces subsequently engaged in beating, raping, killing, arresting and destroying the property of the residents.  The plaintiffs’ claim against Royal Dutch and the other corporations was that the corporations “abetted these atrocities by . . . providing the Nigerian forces with food, transportation, and compensation, as well as by allowing the Nigerian military to use respondents’ property as a staging ground for attacks.”

The plaintiffs filed suit against the oil companies in the United States District Court for the Southern District of New York, claiming violations of the Alien Tort Statute (ATS).  The ATS provides that “[t]he district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”

The ATS has a unique history.  Enacted in 1789, the statute lay mostly dormant for almost two centuries before its revival by human rights activists in 1980 in the landmark case Filartiga v. Pena-Irala.  In Filartiga, the Second Circuit allowed an ATS claim based on the torture and death of a Paraguayan citizen at the hand of a Paraguayan police official.  The conduct at issue took place in Paraguay, but jurisdiction was proper in the United States District Court for the Eastern District of New York based on the defendant’s presence in Brooklyn, New York on a visitor’s visa.

Filartiga opened the door to subsequent civil claims for human rights abuses under the ATS, notably Sosa v. Alvarez-Machain, in which the US Supreme Court defined and narrowed the scope of such claims.  In Sosa, Justice Souter, writing for the majority, explained the necessity of restraint in permitting ATS claims and mandated that only a very narrow set of claims and circumstances should be actionable under ATS.  Sosa did, however, leave the ATS open as an avenue for future claims of violations of international legal norms that were “specific, universal, and obligatory.”

Which leads us back to Kiobel.  The violations underlying the Kiobel plaintiffs’ claims (extrajudicial killings and torture, among others) could possibly have qualified as violations of the law of nations, as required by the ATS.  However the Supreme Court’s decision to dismiss the claims turned not on the types of crimes but on the location of the acts.  Chief Justice Roberts explained in the Kiobel holding that “all the relevant conduct took place out­side the United States. And even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application.”

The “presumption against extraterritorial application” of US laws is a well-known canon of statutory interpretation.  As Chief Justice Roberts explained, “When a statute gives no clear indication of an extraterritorial application, it has none.”  According to Kiobel, nothing in the ATS indicates Congress’ intent for the law to apply extraterritorially, so the ATS does not allow courts to recognize a cause of action for violations involving foreigners occurring outside the US.  Thus, the Kiobel plaintiffs’ claim was barred.

Future Impacts

Much of the debate on Kiobel’s implications focuses on the future of human rights protection, and whether and to what extent the decision will adversely impact efforts to stop human rights abuses.  Many agree that that the ATS’ ability to further the human right movement is greatly diminished, if not dead.  Whether the loss of the ATS as a tool ultimately hinders the entire movement remains to be seen.

Torture is Wrong

Indeed it is, but who has time to prosecute it?
(Neon Tommy)

Judge Leval of the Second Circuit Court of Appeals is pessimistic.  He notes that bringing a claim in the United States under the ATS was one of a very few avenues for human rights abuse victims to seek justice and compensation.  The ATS, while an imperfect solution, nevertheless has provided recourse to victims who were otherwise out of options.  Leval notes that “victims seeking recognition of the wrongs done to them and compensation for their suffering cannot get relief in their home countries, and they have practically no courts available to them elsewhere.”  Leval also touches on the big picture benefits of the ATS, noting that human rights suits under the ATS draw global attention to atrocities.

While international criminal tribunals were created to address many of the above mentioned issues, Judge Leval notes that criminal prosecutions in these tribunals are “infrequent, slow, and inefficient.”  Leval points out that the ICC, the most prominent of the international criminal courts, has tried only ten cases in its existence and convicted just one person.  Lastly, Judge Leval worries that if the United States, which is at the vanguard of foreign human rights suits, stops allowing these claims, there will be no other countries who will want to step in and fill that void.

Professor Moyn, on the other hand, appears optimistic in the aftermath of Kiobel, if only because he sees more effective ways to pursue a global human rights agenda.  Moyn finds the ATS an inefficient path for human rights, noting there is “little evidence . . . that the wave of ATS litigation has put a dent in the world’s suffering.”  Moyn acknowledges the individual benefits plaintiff have achieved via ATS claims, but wonders if these little victories improperly distract human rights champions away from pursuit of broader human rights goals.  With the ATS crippled, Moyn envisions a future in which the human rights activists focus more on structural evils and connect with broad social movements rather than narrow litigation strategies.

Eugene Kontorovich, a professor of law at Northwestern, agrees with Moyn’s criticism of the small impacts of ATS litigation.  Kontorovich notes that ATS lawsuits have only a marginal effect on the human rights crusade because they do not target the true and powerful criminals: the governments of foreign countries.

Moyn’s and Kontorovich’s skepticism over ATS claims, while seemingly looking at the big picture, misses the forest for the trees.  The big picture in the human rights movement is, after all, about small groups of individuals.  It is people like those in Ogoniland, and minorities groups in general, who are most in need of an instrument to seek justice.  Even if we achieve improvements in human rights in the long run without the ATS, the Ogoni people now are still without their homes, families, and livelihoods.  The human rights movement, at is core, is meant to stop the abuses of the few.  So we must not forget about the few by proclaiming that one of the only avenues of recourse available to them (the ATS) is without great value.

Tom Scott is a graduating third year law student at the Sturm College of Law, is a Publishing Editor for The View From Above, and a Staff Editor on the Denver Journal of International Law and Policy.

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Justices of the US Supreme Court

Kiobel Oral Argument: Piracy May Spell Trouble for Shell

Justices of the US Supreme Court

The Supreme Court opened up its October term with a healthy dose of international law in Kiobel v. Royal Dutch Shell. The petitioner, Esther Kiobel, is bringing suit against Royal Dutch Shell (Shell) alleging that the oil company aided and abetted the Nigerian government in committing gross human rights violations in the oil rich Ogoni region of Nigeria.

This is the second time this year that the Court has heard Paul Hoffman’s arguments in favor of the plaintiffs and Kathleen Sullivan’s arguments on behalf of Shell, and maritime piracy played a role in both rounds of arguments.

The first round of Kiobel oral arguments considered whether the Alien Tort Statute (ATS) could be applied to corporations as well as natural persons. There, Justice Breyer evoked the concept of “Pirates, Incorporated” to inquire into whether a rem action against an 18th century pirate could be foreclosed because “Pirates, Inc.,” rather than the individual pirate, owned the property at issue.

In the second round of oral arguments, held yesterday morning, the issue had changed from whether the ATS can be applied to corporations to whether it can be applied extraterritorially. Despite this change of focus, maritime piracy played an even more important substantive role in the second iteration of the Kiobel arguments than the first.

Piracy first came up when Justice Scalia asked Royal Dutch Shell’s attorney, Kathleen Sullivan, whether she believed – as Scalia thought she “must” – that the ATS applied to high seas conduct. She did not. Ms. Sullivan then quickly tried to turn her argument to the Marbois incident concerning an assault on a French diplomat.

But Chief Justice Roberts immediately raised the question of piracy again, noting that “it was the most clear violation of an international norm” at the time of the ATS’s passage.

Ms. Sullivan again attempted to minimize her high seas argument, noting that even if the justices concluded that the ATS reached high seas conduct, it does not extend into the territory of another state. However, she doubled down when she argued that Sosa v. Alvarez-Machain – the last ATS case heard by the Supreme Court – does not foreclose the possibility that the ATS’s reach stops at the high seas, as that opinion stated that piracy might be an area covered by the statute.

Despite her repeated attempts to stray away the issue of piracy, the oldest international crime came up again and again, including in the context of Filartiga v. Peña-Irala, where the Second Circuit held that, “[f]or the purposes of civil liability, the torturer has become – like the pirate and slave trader before him – an enemy of all mankind.”

As Shell’s attorney, Ms. Sullivan wished to steer clear of the issue of maritime piracy for several reasons. The first is that the Supreme Court explicitly found that the First Congress meant to include piracy as one of three torts available to 18th century ATS plaintiffs. The Supreme Court would likely be reluctant to admit that it was wrong less than a decade after Sosa was handed down.

Second, foreclosing ATS claims that occur on the high seas is the furthest possible extension of the respondents’ argument, one that the majority need not adopt to reach the respondents’ desired verdict.

Finally – and this may have been what Justice Scalia was getting at when he initially posed the question – it is difficult to find an example of an American law that applies on the high seas but not on foreign soil.[1] The presumption against extraterritoriality is purely a creature of Congressional intent, and it seems that Congress rarely distinguishes between the high seas and foreign soil when considering a statute’s extraterritoriality.

If the conservatives on the Supreme Court find the argument that ATS application on the high seas and on another country’s soil rises and falls together persuasive, there is enough historical evidence that the ATS was meant to apply to piracy that more newly-minted universal violations could ride on piracy’s coattails and allow for extraterritorial application of the ATS.

The effect such an opinion would have on pending litigation over a high seas requirement for facilitators of piracy is better saved for another day.

This is cross-posted at Communis Hostis Omnium.

[1] Depending on the ultimate outcome of pending litigation, a notable exception to this general rule could be, however ironically, 18 USC § 1651, the statute criminalizing piracy.

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The Supreme Court of the United States

News Post: ATS Decision Postponed

After oral arguments last Tuesday, the U.S. Supreme Court issued a short order stating that it would hear arguments in its subsequent term as to whether the Alien Tort Statute, a law promulgated in 1789, can be used to sue multinational corporations in U.S. federal courts for alleged human rights abuses committed abroad.

The Supreme Court of the United States

The Alien Tort Statute allows Article III courts to hear “any civil action by an alien for a tort . . . committed in violation of the law of nations or a treaty of the United States.”  The law was largely dormant until the last two decades, when federal courts began to apply it to international human rights cases.  For example, the U.S. Supreme Court left open the possibility of holding corporations accountable in Sosa v. Alvarez-Machain, so long as the alleged violations dealt with international norms with “definite content and acceptance among civilized nations.”  Since the 1980’s, more than 120 lawsuits have been filed in the United States against 59 corporations for alleged violations of international law in 60 foreign nations.

The Supreme Court’s short order this week stems from issues arising from Kiobel v. Royal Dutch Shell Petroleum Co, a lawsuit involving 12 Nigerians alleging that Royal Dutch (“Shell”) aided and abetted the Abacha dictatorship by cracking down on citizen protests against oil exploration through acts of torture, executions and crimes against humanity.   Last Tuesday, the Court heard arguments on the narrow issue of whether aliens can sue corporations under the U.S. statute, an issue reminiscent of the Court’s renowned Citizens United opinion.  The argument follows that if corporations are people for the purpose of rights secured by the U.S. Constitution, per Citizens United, they ought to be treated as such, and held accountable, when it comes to violations of international law abroad, too.

Although some Justices seemed ready to rule on the narrow issue, Justices Alito, Breyer and Kennedy questioned whether the Court and U.S. federal courts had jurisdiction to hear such lawsuits for genocide and war crimes occurring abroad at all.  Justice Alito asked, “What business does a case like that have in courts of the United States?”, while Justice Breyer followed by stating, “There is no United States Supreme Court of the World.”   Many agree that the U.S. judiciary should not meddle in foreign affairs or police the actions of foreigners abroad.  Human rights activists counter, however, that if U.S. courts do not have jurisdiction over U.S companies’ actions abroad, as a practical matter, victims lack any forum where justice may be served.

Briefs on the issue of whether and under what circumstances Article III Courts have jurisdiction to hear cases arising from violations of international law under the Alien Tort Statute are due in May and June, and the Court will hear oral arguments in its next term, which is to begin in October.  Corporations will nervously twiddle their thumbs in anticipation of the Court’s ruling, which could very well lead to time-consuming and costly litigation if corporations are to be held accountable in U.S. courts for their alleged roles in foreign abuses that violate international law.

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University of Denver Sturm College of Law