Note on… Sosa v. Alvarez-Machain, on the long road towards international corporate liability recognition under ATS

August 18, 2010

US courts’ success in making US firms liable for their acts abroad under paragraph 1350 of the US Code (ATS) is uncertain and suffers great difficulties facing the forum non conveniens doctrine. The ATS, it should be recalled, allows foreign nationals to bring claims before US courts for any tort committed by American entities in violations of US treaties or International Law.

That being said, although US judges have progressively acknowledged having jurisdiction over the activities of American firms abroad, the Sosa v. Alvarez-Machain (542 U.S. 692, 2004) decision significantly stepped back by refusing to engage into giving force to international rules.

In Union Carbide (Union Carbide Corporation, 26 Int’l Legal Materials 1009 1987), a claim was brought under paragraph 1350 ATS for reparation upon a massive gas leak which killed 7.000 to 10.000 people in Bhopal while leaving an additional half million people exposed. The court denied having jurisdiction over the case and dismissed it on the ground that Indian Courts would constitute the most appropriate forum because of their “superior position to construe and apply applicable Indian law and standards”, so that overall the “Choice of the United States as a forum would not be given the deference to which it would be entitle if this country were their home”(p.1012). While seven Indian nationals who formerly worked for the Indian branch of Union Carbide were found liable for causing death by negligence in June 2010, the responsibility of the parent corporation has yet not been considered.[1] Corporate international liability was eventually reconsidered in Spiliada (Spiliada Marititme Corporation v. Cansulex Ltd [1987] AC 460), where it was held that where home-courts’ authority is “distinctly more suitable for the ends of justice […] then the case is a proper one for service out of jurisdiction”(468), the main difficulty however being for the plaintiff “to assume the burden of proving some convincing explanation” that the case’s “centre of gravity” would indeed give jurisdiction to home-courts (at 124, 137-138).

The US Court of Appeal (2nd Circuit) recently reviewed this position. Dismissing a previous award rendered on the ground of forum non conveniens, it significantly recognised corporate liability in forced labour and torture circumstances under ACTA and the 1991 Torture Victim Protection Act (See Wiwa v. Royal Dutch Petroleum Company and Shell Transport and Trading Company Plc. USCA 2nd Circuit., 2000 US App. LEXIS 23274).  In Doe vs. Unocal also, the Court found it had basis for jurisdiction since managerial control was exercised by the parent firm, possibly engaging its liability for acts of its subsidiary and those of their partners and joint-ventures (Doe v. Unocal, 963 F. Supp.880 US Dist. Ct C.D. Cal, 25 March 1997; 92 AJIL 1998, p313).

It can however be suggested that US judges might have chosen to follow a different route h in Sosa v. Alvarez-Machain (542 U.S. 692, 2004), where the tribunal refused to engage into giving force to international rules. Some selected Court findings speak for themselves:

IV. Congress has not in any relevant way amended art.1350 (ACTA) or limited civil common law power by another statute. Still, there are good reasons for a restrained conception of the discretion a federal court should exercise in considering a new cause of action of this kind. Accordingly, we think courts should require any claim based on the present-day law of nations to rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to the features of the 18th-century paradigms we have recognized. This requirement is fatal to Alvarez’s claim.

A.    […] We have no congressional mandate to seek out and define new and debatable violations of the law of nations, and modern indications of congressional understanding of the judicial role in the field have not affirmatively encouraged greater judicial creativity. It is true that a clear mandate appears in the Torture Victim Protection Act of 1991, providing authority that “establish[es] an unambiguous and modern basis for” federal claims of torture and extrajudicial killing. But that affirmative authority is confined to specific subject matter, and although the legislative history includes the remark that § 1350 should “remain intact to permit suits based on other norms that already exist or may ripen in the future into rules of customary international law”, Congress as a body has done nothing to promote such suits. Several times, indeed, the Senate has expressly declined to give the federal courts the task of interpreting and applying international human rights law, as when its ratification of the International Covenant on Civil and Political Rights declared that the substantive provisions of the document were not self-executing.

B.    […] Since many attempts by federal courts to craft remedies for the violation of new norms of international law would raise risks of adverse foreign policy consequences, they should be undertaken, if at all, with great caution.

[…]  All Members of the Court agree that § 1350 is only jurisdictional. We also agree, […] that the jurisdiction was originally understood to be available to enforce a small number of international norms that a federal court could properly recognize as within the common law enforceable without further statutory authority (however) subsequent developments should be understood to preclude federal courts from recognizing any further international norms as judicially enforceable today, absent further congressional action […] we now tend to understand common law not as a discoverable reflection of universal reason but, in a positivistic way, as a product of human choice. And we now adhere to a conception of limited judicial power first expressed in reorienting federal diversity jurisdiction, that federal courts have no authority to derive “general” common law.

In other words, Sosa suggests that (1) “courts should require any claim based on the present-day law of nations to rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to the features of the 18th-century paradigms we have recognized” means that US Courts might refuse to deal with any international norm not being written down or crystallised in customary international law; (2) Despite the recognition that paragraph 1350 (ATS) allows court jurisdiction on international liability matters the mention that “Congress as a body has done nothing to promote such suits” restricts ATS application to treaties and practice of international law translated into US law by Congress order insofar “federal courts have no authority to derive general common law”.

More than interrupting the trend initiated by previous decisions, the judges in Sosa furthermore isolated themselves from practices witnessed recently in other jurisdictions. The 2008 report by Special Representative John Ruggie indeed comments that “elsewhere it is getting somewhat more difficult for defendant companies to have cases alleging harm abroad dismissed on the basis that there is a more appropriate forum” (at 90). Citing Voth v. Manildra Flour Mills Pty. Ltd., the report emphasises that in Australia, defendants must now prove that the forum is “clearly inappropriate” for the forum non conveniens doctrine being applied, which is clearly more difficult to satisfy than showing that another forum is ‘more appropriate’ as it was the case in Spiliada. Similarly, the European Court of Justice in Owusu v. Jackson, characterised as “bad law” a decision which relied on the forum non conveniens doctrine (at 16) therefore confirming that national courts in an EU member state may not dismiss actions against companies domiciled in that State on such grounds. It was held:

38. Respect for the principle of legal certainty, which is one of the objectives of the Brussels Convention […] would not be fully guaranteed if the court having jurisdiction under the Convention had to be allowed to apply the forum non conveniens doctrine

41. Application of the forum non conveniens doctrine, which allows the court seised a wide discretion as regards the question whether a foreign court would be a more appropriate forum for the trial of an action, is liable to undermine the predictability of the rules of jurisdiction laid down by the Brussels Convention, in particular that of Article 2, and consequently to undermine the principle of legal certainty, which is the basis of the Convention.

By contrast with previous decisions, Sosa therefore importantly restrained the recognition of the international liability of American firms for their activities abroad, and translated the idea that, in Muchlinksi’s words, US courts were overall not willing to become a global forum for litigations brought against MNCs. Although more than 50 cases have been brought against companies under the Alien Tort Statute alleging corporate involvement in human rights abuse abroad since Doe v. Unocal litigation in 1997, [2] it is suggested that in the absence of a confirmed trend towards the admission of US Courts’ jurisdiction over international liability matters, reputational risks might constitute the essential asset of the ATS arsenal.

Elsewhere however, the recognition of corporate responsibility might increase as a result of Australian and European scepticisms towards the forum non conveniens doctrine. Ongoing evolutions can indeed be witnessed, and although caution is necessary, it could be suggested that overall, multinational groups can no longer take for granted that claims for the recognition of their international responsibility will be dismissed on a forum non conveniens basis.

[1] Amnesty International, ‘India: First convictions for 1984 Union Carbide disaster too little, too late’ (7 June 2010)

[2] Human Rights Council, Business and human rights: Towards operationalizing the “protect, respect and remedy” framework”, Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, A/HRC/11/13 (22 April 2009), at 26


4 Responses to “Note on… Sosa v. Alvarez-Machain, on the long road towards international corporate liability recognition under ATS”

  1. […] as it is relates to a note on international corporate liability published recently on the Law Notepad. In 1984 as Frewen recalls, a major incident stroke Bhopal when a gas leak killed thousands of […]

  2. […] news raises complementary thoughts as to the policy consequences of the Kiobel, Boimah Flomo and Sosa decisions on corporate liability under ACTA / ATS. In fact, many criticisms can be read as to the […]

  3. Anonymous Says:

    I was studying something else about this on another blog. Interesting. Your perspective on it is diametrically contradicted to what I read before. I am still contemplating over the diverse points of view, but I’m leaning to a great extent toward yours. And irrespective, that’s what is so superb about contemporary democracy and the marketplace of ideas on-line.

  4. […] violations of any international law norm which did not exist when paragraph 1350 was enacted (See here). “The fact that the law of nations provides no private right of action to sue corporations”, […]

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