The Curious Case of Corporate Liability Under the Alien Tort Statute: A Flawed System of Judicial Lawmaking

by Julian G. Ku ~ Dec 01, 2010

For over two decades, U.S. courts have held that private corporations owe duties under customary international law and can be subject to lawsuits under the Alien Tort Statute (ATS). This approach to corporate liability was so widely accepted that courts barely acknowledged the issue when deciding on cases involving corporate defendants. Meanwhile, legal commentators joined in universal support for corporate liability.

Despite this wide support, the view that corporations can be liable for violations of customary international law under the ATS is wrong. Customary, as opposed to treaty-based, international law has never recognized the imposition of direct duties on private corporations. Even if some treaties impose direct liability on corporations in some instances (as opposed to imposing obligations on states to regulate corporations), such treaties do not support a general, across-the-board rule of imposing direct liability on private corporations for any or all violations of customary international law. Indeed, customary law has only endorsed direct private-actor liability in the context of international criminal law, and even this somewhat-uncertain liability extends only to natural persons. In sum, a survey of international legal sources would find embarrassingly little evidence of an international consensus (or even of international support) in favor of imposing liability on private corporations for general violations of customary international law.

This lack of an international consensus is both surprising and troubling because, until very recently, U.S. courts have universally held that the liability of private corporations satisfies the supposedly exacting "specific, universal, and obligatory" standard, set forth by the Supreme Court of the United States in Sosa v. Alvarez-Machain, that customary international law norms must meet in order to be invoked under the ATS. This standard, according to the Court, strictly limits the role of federal courts in recognizing new and unsettled causes of action under the ATS. But, as the U.S. Court of Appeals for the Second Circuit recently held in Kiobel v. Royal Dutch Petroleum when it applied this standard, corporate liability "is not a rule of customary international law that we may apply under the ATS."

This Article has two goals. First and foremost, it offers the first comprehensive academic challenge to the widely held view that private corporations can be liable for violations of customary international law. Second, the Article uses the rise of the pro-corporate-liability position to undertake a broader assessment of post-Sosa lawmaking under the ATS. In his concurrence in Sosa, Justice Scalia voiced skepticism about the ability of federal courts to act as effective doorkeepers that would keep out "new and debatable" causes of action, and he argued instead for a complete ban on further judicial recognition of such causes of action. I argue that the manner in which U.S. courts built a consensus that the corporations could be liable under the ATS supports Justice Scalia's skepticism about the system of judicial international lawmaking that is authorized by Sosa.

This Article proceeds as follows. Part I will review the rise of litigation under the ATS and the Supreme Court's 2003 decision in Sosa, which supposedly imposed rigorous limits on lawsuits that are brought under the ATS. Part II will describe the rise of a judicial consensus in the United States that holds that corporations can be held directly liable for violations of customary international law and can therefore be subject to lawsuits under the ATS. Part III will critique this consensus and conclude that there is no serious case to be made that corporations can be liable for violations of customary international law, especially under the supposedly heightened standard imposed by Sosa. Finally, I consider the reasons behind the rise of the flawed consensus on corporate liability. I argue that it reveals problems in the system of independent federal court lawmaking that is authorized by Sosa

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