Alien Tort Statute Update

Supreme Court, SDNY Issue Alien Tort Statute Decisions With Important Implications For Multinational Corporations

Two recent decisions leave the door open for more Alien Tort Statute filings against multinational corporations and encourages companies to take a hard look at their overseas operations.

Southern District Dismisses Alien Tort Statute Case Against Shell’s Nigerian Subsidiary for Lack of Jurisdiction

The Alien Tort Statute (“ATS”) permits an “alien” to bring suit in U.S. federal court for a violation of international law occurring anywhere in the world. In Kiobel v. Royal Dutch Petroleum Co., Nigerian plaintiffs brought suit under the ATS against Shell Petroleum Development Company of Nigeria (“SPDC”), a Nigerian subsidiary of Royal Dutch/Shell, alleging that their protests of SPDC’s oil development and exploration activities in Nigeria were violently suppressed by the Nigerian government with SPDC’s cooperation and assistance. Last week, Judge Kimba Wood of the Southern District of New York dismissed the case against SPDC for lack of personal jurisdiction. The Kiobel decision makes clear the importance, in ATS litigation, of maintaining corporate formalities. Similarly-situated multinational corporations at risk of ATS litigation would be well-advised to review their organizational structure with this in mind.

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U.S. Supreme Court Refuses To Decide Case Addressing Corporate Liability Under The Alien Tort Statute

On June 29, 2010, the U.S. Supreme Court refused to hear a challenge to the applicability of the Alien Tort Statute (“ATS”) to corporations. The U.S. Supreme Court’s refusal to provide any guidance as to what level of foreign state participation in overseas operations leaves corporations with substantial uncertainty as to how to avoid ATS liability, and encourages plaintiffs’ counsel—which include sophisticated public interest law firms and well-funded interest groups—to file still more ATS cases, making ever more inventive and tenuous allegations of cooperation between multinational corporations and foreign governments.

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