Supreme Court Sides With Arab Bank on Foreign Terror Claims

WASHINGTON (CN) - The Supreme Court closed the book 5-4 Tuesday on terror-support claims against Arab Bank by foreigners whose families were maimed or killed in attacks on Israel.

As noted in the lead opinion from Justice Anthony Kennedy, the original case included about 6,000 foreign nationals and a smaller group of U.S. citizens, but the latter claims have found more success and are not at issue here.

The Second Circuit tossed the claims from the noncitizens meanwhile under the Alien Tort Statute of 1789 — the same law that the Supreme Court cited in the 2013 case Kiobel v. Royal Dutch Petroleum, an unsuccessful attempt by Nigerians attempting to hold the Netherlands-based oil giant for being in league with the torture of activists.

But Justice Sonia Sotomayor shot back in a scorching dissent Tuesday that today’s opinion “absolves corporations from responsibility under the ATS for conscience-shocking behavior.”

"In categorically barring all suits against foreign corporations under the ATS, the Court ensures that foreign corporations—entities capable of wrongdoing under our domestic law—remain immune from liability for human rights abuses, however egregious they may be,” Kagan wrote, joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Elena Kagan. “Nor does domestic law."

Kennedy argued meanwhile that holding a corporation liable under civil or criminal law is not a natural extension of the tradition where an international community takes a stand against “the flagrant disregard of basic human rights.”

“This is confirmed by the fact that the charters of respective international criminal tribunals often exclude corporations from their jurisdictional reach,” he wrote. “The Charter for the Nuremberg Tribunal, created by the Allies after World War II, provided that the Tribunal had jurisdiction over natural persons only. Later, a United States Military Tribunal prosecuted 24 executives of the German corporation IG Farben. Among other crimes, Farben’s employees had operated a slave-labor camp at Auschwitz and ‘knowingly and intentionally manufactured and provided’ the poison gas used in the Nazi death chambers. Although the Military Tribunal ‘used the term “Farben” as descriptive of the instrumentality of cohesion in the name of which’ the crimes were committed, the Tribunal noted that ‘corporations act through individuals.’ Farben itself was not held liable.”

Kennedy also pointed to the limited reach of tribunals for the former Yugoslavia and Rwanda. “The international community’s conscious decision to limit the authority of these international tribunals to natural persons counsels against a broad holding that there is a specific, universal, and obligatory norm of corporate liability under currently prevailing international law,” he wrote.

Looking again to Germany, Kennedy quoted the statement from “the Nuremberg proceedings that ‘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.’”

Arab Bank applauded the court meanwhile for affirming its "belief that there is no basis to hold corporations liable under international law."

“The bank looks forward to focusing its full attention on its business, its commitment to safe and sound banking and its dedication to the service of its customers across the globe," the statement continues.

Anton Metlitsky, an O’Melveny appellate partner who was principal author of a brief for the U.S. Chamber of Commerce in the case, offered insight Tuesday on the ruling.

“When the Alien Tort Statute was rediscovered in 1980, it was seen as a narrow vehicle for suits by foreign-citizen victims of torture against their perpetrators,” Metlitsky said in a statement. “But suits under that statute proliferated dramatically when foreign citizens began suing corporations as alleged accomplices to human rights violations in the late 1990s. Today’s decision is the court’s second effort in the past several years to stem that tide.”

In the lead opinion, Kennedy denied that the International Convention for the Suppression of the Financing of Terrorism supports holding Arab Bank liable here.

“The convention neither requires nor authorizes courts, without congressional authorization, to displace those detailed regulatory regimes by allowing common-law actions under the ATS,” he wrote. “And nothing in the convention’s text requires signatories to hold corporations liable in common-law tort actions raising claims under international law.”

Kennedy argued that it is up to Congress, not the judiciary, “to expand the scope of liability under the ATS to include foreign corporations.”

Focusing on questions of diplomacy, Kennedy emphasized that the only connections to the United States that the plaintiffs here can allege are certain transactions in Arab Bank’s New York branch and a brief allegation regarding a charity in Texas.

“At a minimum, the relatively minor connection between the terrorist attacks at issue in this case and the alleged conduct in the United States well illustrates the perils of extending the scope of ATS liability to foreign multinational corporations like Arab Bank,” the ruling states. “For 13 years, this litigation has ‘caused significant diplomatic tensions’ with Jordan, a critical ally in one of the world’s most sensitive regions. ‘Jordan is a key counterterrorism partner, especially in the global campaign to defeat the Islamic State in Iraq and Syria.’ The United States explains that Arab Bank itself is ‘a constructive partner with the United States in working to prevent terrorist financing.’ Jordan considers the instant litigation to be a ‘grave affront’ to its sovereignty.”

Chief Justice John Roberts joined Kennedy’s opinion in full, as did Justice Clarence Thomas, but Justices Samuel Alito and Neil Gorsuch joined only certain parts of the lead opinion.

Of this group, only Roberts did not pen a separate concurring opinion.

Kagan in her dissent meanwhile contrasted today’s holding against the recent precedent from the Supreme Court that has expanded corporate rights, specifically in the 2010 case Citizens United v. Federal Election Commission and in the 2014 case Burwell v. Hobby Lobby Stores Inc.

“Immunizing corporations that violate human rights from liability under the ATS undermines the system of accountability for law-of-nations violations that the First Congress endeavored to impose,” she wrote. “It allows these entities to take advantage of the significant benefits of the corporate form and enjoy fundamental rights, without having to shoulder attendant fundamental responsibilities.”

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