Clifford Chance

Cross-Border Litigation Series: Two Federal Appeals Courts Weigh in on Corporate Liability under the ATCA

4 August 2011

The question of corporate liability under the Alien Tort Claims Act ("ATCA") continues to divide US federal courts, increasing the likelihood that the US Supreme Court addresses the issue in the near future.

Under the ATCA, foreign plaintiffs have filed US claims against multinational corporations for allegedly aiding and abetting human rights violations by foreign governments outside the United States. In September 2010, the US Court of Appeals for the Second Circuit held in Kiobel v. Royal Dutch Petroleum ("Kiobel") that corporations are not liable under the ATCA, pointing towards greater restriction of these types of lawsuits. However, two federal appeals courts recently ruled that corporations can be held liable under the ATCA, creating a deep split in authority. The US Supreme Court will need to intervene to determine whether the controversial practice of suing corporations for money damages for alleged overseas human rights violations will remain viable.

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