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Wednesday, June 19, 2024 | Back issues
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Company Fights to Shield Actions Abroad

(CN) - Blackbeard could have protected his booty from lawsuits by forming Pirates Inc., a lawyer for Royal Dutch Petroleum told the Supreme Court Tuesday morning, defending immunity that is currently afforded to corporations for wrongdoing outside the United States.

Though never accused of piracy, Royal Dutch Petroleum recently dodged claims that it was in league with the torture of activists in Nigeria's Ogoni region by the government.

On Sept. 17, 2010, the 2nd Circuit tossed Kiobel v. Royal Dutch Petroleum on procedural grounds before the case could be argued on its merits.

A majority of the three-judge panel found that corporations could not be sued under the Alien Tort Statute, a law dating back to 1789 that allows American courts to hear foreign citizens' claims against Americans violating international laws and treaties abroad.

Judge Pierre Leval authored an impassioned minority opinion that claimed such immunity could protect corporations engaging in genocide, slavery, torture or piracy.

"So long as they incorporate (or act in the form of a trust), businesses will now be free to trade in or exploit slaves, employ mercenary armies to do dirty work for despots, perform genocides or operate torture prisons for a despot's political opponents, or engage in piracy - all without civil liability to victims," Leval wrote. "By adopting the corporate form, such an enterprise could have hired itself out to operate Nazi extermination camps or the torture chambers of Argentina's dirty war, immune from civil liability to its victims."

Six months later in Washington, the D.C. Circuit affirmed dismissal of a family's claims that the Palestinian Authority abducted Azzam Rahim, a U.S. citizen visiting the West Bank, imprisoned him, tortured him and eventually killed him. The court ruled that only natural persons can be sued under the Torture Victim Protection Act.

The Supreme Court consolidated both cases for review in October 2011 and held the hearing Tuesday morning.

Justice Stephen Breyer pressed Royal Dutch attorney Kathleen M. Sullivan about the pirate analogy.

"Do you think in the 18th century, if they'd brought Pirates Inc., and we get all their gold, and Blackbeard gets up, and he says, 'Oh, it isn't me; it's the corporation,' - do you think that they would have then said: 'Oh, I see, it's a corporation. Good-bye. Go home,'" Breyer asked, prompting laughter in the courtroom, according to the transcript.

Sullivan replied that Blackbeard would have a real defense, in that hypothetical.

"Justice Breyer, yes, the corporation would not be liable," Sullivan said, citing the 1820 case U.S. v. Smith, which defined piracy as "robbery at sea."

Sullivan said the pirate example is ultimately unnecessary because the case involved post-Nuremberg human rights offenses.

"So, even if I gave you Pirates Inc., it wouldn't decide this case," she said. "But in fact Pirates Inc. was not suable; it was the ship that could be seized."

Corporate persons were not tried at Nuremberg, she added.

"It pierced to the notion of hiding behind a state abstract entity, and held individuals, including individual businessmen from Alfred Krupp to 28 officials indicted from the I.G. Farben firm," Sullivan said. "Nuremberg was about individual liability."

Justice Ruth Bader Ginsberg noted that I.G. Farben, which held the patent to gas chamber chemical Zyklon B, was dissolved and had its assets taken.

Sullivan replied that its dissolution "preceded any of the tribunals, either national or international."

"When the allies prosecuted perpetrators of the Nazi horrors in later cases, they prosecuted again only individual officers, not any corporations," Sullivan said.

Ginsberg noted that Nuremberg focused on criminal, not civil liability.

Sullivan countered that the Alien Tort Act allowed civil actions against violators against the "law of nations," and claimed international law "rejects corporate accountability."

"Your Honor, we do not urge a rule of corporate impunity here," Sullivan said. "Corporate officers are liable for human rights violations and for those they direct among their employees. There can also be suits under state law or the domestic laws of nations, but there may not be ATS [Alien Tort Statute] federal common-law causes of action against corporations."

Paul Hoffman, who represents the Nigerians, bristled at the notion that international law gives a pass to corporations.

"If it was true that international law barred corporate liability, then our friends the United Kingdom and Netherlands have violated international law by passing legislation that imposes criminal liability on corporations for violating genocide crimes against humanity, and war crimes," Hoffman said.

Transnational corporations, human rights observers and governmental organizations have watched Kiobel v. Royal Dutch Petroleum closely in its path to the Supreme Court.

More than 30 interested parties, including Chevron, BP, the U.S. Chamber of Commerce, Earthrights International and the Brennan Center of the NYU School of Law submitted amicus briefs arguing the opposing sides.

U.S. government lawyer Edwin Kneedler appeared at the hearing, opposing blanket immunity for corporations under the Alien Tort Statute, a law believed to have been designed for diplomatic reasons.

The justices will mull the dozens of arguments in the case, which was formally submitted at 11:04 a.m.

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