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July 01, 2004
Does Supreme Court Validation of Alien Tort Claims Act Apply to Corporations?
    by William Baue

Human rights organizations say yes, lawyers representing corporations in ATCA cases say no, but the Supreme Court opinion itself remains vague on the issue.

On Tuesday, the US Supreme Court announced its decision in the Sosa v. Alvarez-Machain case, issuing important interpretations of the Alien Tort Claims Act (ATCA). This 1789 law allows non-citizens to seek legal recourse in US courts for violations of international law that are not protected in their home countries. Although the Justices ruled that the ATCA does not apply in this specific case, the majority opinion upheld the validity of using the ATCA to redress human rights violations that occur outside US jurisdiction. This rebutted corporate groups such as the Business Roundtable and the US Chamber of Commerce who joined the Bush Administration in filing amicus (or "friend of the court") briefs arguing that acts occurring outside US jurisdiction should not be tried in US courts.

"The Alvarez decision erases any doubt about the validity of the ATCA for addressing egregious human rights cases, and sends a clear message to multinationals who seek to profit from forced labor and torture of workers and other human rights victims,” said Terry Collingsworth, executive director of the International Labor Rights Fund (ILRF). Mr. Collingsworth serves as legal counsel for litigants in ATCA cases against Unocal (ticker: UCL), ExxonMobil (XOM), Coca-Cola (KO), and Occidental (OXY), among others.

Justice David Souter's lead opinion clearly supports the first half of Mr. Collingsworth's assertion, opening the door for ATCA cases involving "heinous actions--each of which violates definable, universal, and obligatory norms," such as torture and genocide. However, a footnote to this point reveals that the Court's opinion is not so clear on the second half of Mr. Collingsworth's statement regarding the question of whether corporations can be held accountable under the ATCA.

"The Supreme Court's decision does not explicitly resolve this question," said Phil Rudolph, an attorney with Washington, DC-based law firm Foley Hoag and former international general counsel for McDonald's (MCD). "Except for a very brief footnote, the Court does not address the applicability of the ATCA to corporations and/or people acting as their agents or otherwise on their behalf."

"But this footnote--number 20--certainly doesn't rule out such applicability," Mr. Rudolph told "I suspect that one of the battlegrounds for the pending cases will be specifically this question--to what extent can ATCA cases be brought against corporations or related parties."

The Doe v. Unocal ATCA suit will likely be the first case to put this question to the test. The case was initiated by fifteen Myanmar refugees who allege that the company is liable for murder, rape, and forced labor committed by soldiers guarding its gas pipeline.

Daniel Petrocelli, an attorney with Los Angeles-based law firm O'Melveny & Myers serving as outside counsel for Unocal in its ATCA case, interprets the decision much differently from Mr. Rudolph.

"The reality is that this is a nail in the coffin of [the statute] being used against US businesses," Mr. Petrocelli told the Wall Street Journal. Mr. Petrocelli is also representing Cintas (CTAS) in a suit against socially responsible investment (SRI) firm Walden Asset Management alleging that Walden senior vice president Tim Smith defamed the company in calling a Haitian supplier a sweatshop. "This issue has now been put to rest."

"I sure don't read the decision this way," said Mr. Rudolph, though he understands how Mr. Petrocelli could come to his conclusion. "I think that Justice Souter's opinion was careful not to embrace an overly expansive interpretation of the kinds of wrongful conduct covered by the statute--for this reason, defendants in ATCA cases [such as Unocal] are understandably encouraged."

"But it is a bit premature for them to break out the champagne," he added.

Justice Souter explicitly rejected Justice Antonin Scalia's opinion limiting the ATCA's scope to the three international laws recognized at the time of the law's passage, dealing with piracy, fair passage, and the protection of ambassadors. Justice Souter cited the 1980 Filartiga v. Pena-Irala case, which exhumed the ATCA from obscurity by applying it to current international human rights laws.

"For the purposes of civil liability, the torturer has become, like the pirate and the slave trader before him, hostis humani generis, an enemy of all mankind," this landmark ruling famously stated.

What remains to be seen is whether a corporation can be considered under the ATCA to be "an enemy of all mankind", either through its own actions or through agents acting on its behalf, such as security forces.


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