Note on… Kiobel v Shell and corporate liability

October 16, 2010

By Antoine Martin.
Recently followed as a precedent in Flomo v Firestone, Kiobel v Shell is one of the last two decisions having elaborated on the concept of corporate liability for human rights violations under the US Alien Tort Claim Act (ATCA / ATS).

This note summarises the findings of the Court together with the arguments of Circuit Judge José A. Cabranes and the concurring opinion of Judge Pierre Leval.

Violation of a principle of customary international law value

Judge Cabranes first brought forward that the tribunal’s jurisdiction under ATS was not to be determined under the domestic law of the United States but under the rules of customary international law.

Therefore, although domestic laws acknowledged a principle of corporate liability, the international nature of ATS claims by contrast required a finding of a corporate liability principle under customary international law, as well as a violation of such a principle for the US Court to have jurisdiction over the case. As the decision reads:

“By conferring subject matter jurisdiction over a limited number of offenses defined by international law, the ATS requires federal courts to look beyond rules of domestic law—however well-established they may be—to examine the specific and universally accepted rules that the nations of the world treat as binding in their dealings with onea nother […] In other words, the fact that corporations are liable as juridical persons under domestic law does not mean that they are liable under international law (and, therefore, under the ATS)”. (p.5)

“We must ask whether a plaintiff bringing an ATS suit against a corporation has alleged a violation of customary international law”. (p.6)

Only natural persons can be held liable under customary international law

Referring to the practice of the Nuremberg tribunals, the Kiobel Court found that only individuals could be held liable for violations of international law. In the majority’s decision indeed, Nuremberg as well as the following ad-hoc tribunals made it clear that although they rejected the argument that only states could be liable under international law, they deliberately focused on prosecuting the individual men and women who committed international crimes, to the exclusion of “abstract entities” such as corporations, which in facts are controlled by the will of physical persons (p.7).

“From the beginning, however, the principle of individual liability for violations of international law has been limited to natural persons—not “juridical” persons such as corporations—because the moral responsibility for a crime so heinous and unbounded as to rise to the level of an “international crime” has rested solely with the individual men and women who have perpetrated it. As the Nuremberg tribunal unmistakably set forth in explaining the rationale for individual liability for violations of international law: “Crimes against international law are committed by men, not by abstract entities, and only by punishing individuals who commit such crimes can the provisions of international law be enforced” (p.7).

As a result, although Judge Cabrane emphasised that the alleged crimes denounced by the plaintiffs might have corresponded to “a limited number of international crimes including war crimes, crimes against humanity (such as genocide), and torture”, the decision nevertheless suggested that liability for such crimes was deemed strictly individual, so that the Court’s jurisidiction under ATS was restricted to claims in tort against individuals (p.8). The decision read:

“however, customary international law has steadfastly rejected the notion of corporate liability for international crimes, and no international tribunal has ever held a corporation liable for a violation of the law of nations.

We must conclude, therefore, that insofar as plaintiffs bring claims under the ATS against corporations, plaintiffs fail to allege violations of the law of nations, and plaintiffs’ claims fall outside the limited jurisdiction provided by the ATS. We emphasize that the question before us is not whether corporations are “immune” from suit under the ATS: That formulation improperly assumes that there is a norm imposing liability in the first place.” (p.9)

The Court, finally, concluded that while the scope of liability in ATS suits alleging violations of customary international law was to be determined by customary international law itself, no “specific, universal, and obligatory” norms ever subjected corporation to any form of liability under the customary international law of human rights. It accordingly held that corporate liability was “not a discernable—much less universally recognized—norm of customary international law”, and concluded on its inability to hear the case. The claim as a result, was dismissed for lack of subject matter jurisdiction.

Questioning the decision

The Court’s reliance on the Nuremberg tribunals first, can most likely be questioned. While contemporary rules of customary international law allegedly take into consideration the current evolutions of the international community, one could actually ask whether grounding a decision on the principles followed fifty years ago is adequate.

The decision, in addition, can be criticised since, by focusing on the juridical nature of the crime perpetrator rather than on the recognition of the crime itself, it failed to fulfil the punishment objective of justice and to compensate the victims for their prejudice. As it has been said elsewhere, the ‘what’ should prevail over the ‘who’ in qualifying the existence of a crime, it being committed at either domestic or international levels.

Concurring opinion of Judge Leval

Judge Leval as a matter of fact, provided a spirited concurring opinion which strongly criticises the majority’s decision for its consequences.

With regards to slave trading or exploitation for instance, Leval writes that “according to the majority’s rule, an incorporated entity does not violate international law when it conducts such operations, and is free to retain any profit earned through its conduct” (p.13).

The decision similarly, would offer “secure protection for the profits of piracy so long as the perpetrators take the precaution to incorporate the business [while] the seizure by pirates of a vessel owned by a corporation (as virtually all commercial vessels are) would not violate international law’s prohibition of piracy” (p.14).

Acts of Genocide also, would be shielded from liability recognition despite the most likely involvement –as it was allegedly the case in Kiobel– of corporations with local police or military forces for the purposes of security maintenance: “under the majority’s rule, such a corporation would never need to test in court whether it in fact exterminated a tribe, as alleged. It could simply move for the dismissal of the suit, asserting that it is a corporation and therefore by definition could not have violated international law’s prohibition of genocide” (p.15-16).

Apart from the debatable corporate immunity aspect of the decision, the legal grounding of the majority’s reasoning is also questioned by Judge Leval. While the majority’s opinion asserts that “customary international law has steadfastly rejected the notion of corporate liability for international crimes” (p.9), Judge Leval by contrast suggests the absence of adequate precedent justifying such a position.

Rather, the dissenting opinion formulates that “no authoritative source document of international law adopts or in any way approves the majority’s view that international law authorizes imposing civil awards of compensatory damages on natural persons but leaves corporations free to violate its rules without legal consequences”, while no court dismissed a civil suit against a corporation on the ground that juridical persons have no legal responsibility under that international law (p.21).

Citing ‘deficiencies’ in the majority’s reasoning, Judge Leval finally emphasised that the inability of the international criminal tribunals to impose criminal punishment on corporations, far from confirming the absence of corporate liability, “in no way implies that international law exempts corporations from its rules” while the refusal of international organizations to impose criminal liability of corporations neither implies that international law “deems corporations exempt from international law” (p.35-36).

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Also related:

Kenneth Anderson on Kiovel v Royal Dutch Petroleum – via Conflicts of


4 Responses to “Note on… Kiobel v Shell and corporate liability”

  1. […] the findings of the US Court of Appeal for the Second Circuit in Kiobel v Shell, (see a previous Int’Law Notepad Note) the respondent (FNRC) in Boimah Flomo (Boimah Flomo, et al v Firestone Natural Rubber Company […]

  2. […] 3, 2010 Recent 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 […]

  3. […] An appellate court of the United States recently dismissed claims for damages brought by Nigerian residents against the Dutch oil and gas company Shell, finding that it has no subject matter jurisdiction to hear cases of foreign victims of torts committed outside of the U.S. by corporations (Kiobel v. Royal Dutch Petroleum, as covered in this Note). […]

  4. […] February 2012) before the US Supreme Court. The case was commented a moment ago on this blog (see here as well as the ATCA / ATS tags for more comments)  and it seemed at the time that the Court was […]

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