Supreme Court hands broad victory to business in human rights case

The Supreme Court delivered a broad victory to multinational companies on Wednesday by shielding them from a type of human rights lawsuit.

The court affirmed a ruling from a lower court that the 200-year-old Alien Tort Statute (ATS) does not give U.S. courts jurisdiction to hear lawsuits about foreign acts involving international law.

Human rights activists have tried to use the loosely worded statute to go after multinational companies they say are complicit in abuses by dictatorial regimes.

In the case at hand, Kiobel v. Royal Dutch Petroleum, Nigerian activists sued the oil giant Shell in the United States for allegedly aiding the Nigerian government in the torture and execution of local activists.

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The court threw out the suit in a 9-0 decision, with liberal justices arguing for a more narrow ruling than the one issued by the conservative majority. 

“There is no indication that the ATS was passed to make the United States a uniquely hospitable forum for the enforcement of international norms,” the court said in the majority ruling from Chief Justice John Roberts.

"On these facts, 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. Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices," Roberts wrote.

In the concurring opinion from liberals on the court, Justice Stephen Breyer said he would have used more narrow reasoning to make room for lawsuits in specific cases, such as when U.S. national interest is at stake.

Business groups had argued that foreign firms would stop setting up U.S. subsidiaries if they came to believe such a presence would open them up to lawsuits on the statute.

The U.S. Chamber of Commerce, which represents major corporations in Washington, praised the decision.

“The U.S. Supreme Court’s decision today ensures that trial lawyers cannot continue to use the American judicial system to expose global businesses to frivolous and costly lawsuits,” said Tom Donohue, president of the Chamber.

“Today’s decision helps to ensure that America will continue to be an attractive place to do business and removes barriers for companies looking to do business throughout the world.”

The U.S. Council for International Business said justices have “shut the door” on further lawsuits.

“After many years of sounding the alarm against abuse of the ATS, we are extremely gratified that the court has handed down such a clear and well-reasoned ruling,” its president, Peter Robinson, said in a statement. 

Human rights groups had argued that without the threat of U.S. lawsuits, some of the world’s worst leaders would be free to act with greater impunity. They said the ruling leaves victims of violent regimes with little legal recourse.

“This unfortunate ruling slams shut the doors of American courts to many victims of atrocities committed abroad. With this surprising decision, the Supreme Court has reversed years of important precedents that had made the U.S. courts a leader in providing redress for international abuses," said Human Rights Watch spokesman Reed Brody.

But business leaders said the court's ruling provides certainty to companies that operate on a global scale.

“The court’s decision is a win for companies’ ability to conduct business globally and critical to other pending ATS cases," National Foreign Trade Council President Bill Reinsch said.

— Last updated at 2:51 p.m.