ETHICS CORNER DEFENSE CONTRACTING
Uncertainty Persists Around Alien Tort Statute
By Laura Alexander and Christopher Hale

Photo: iStock
As defense contractors pursue an increasing array of opportunities abroad, they must remain mindful of the risks of civil liability and lawsuits brought against them in U.S. courts by foreign victims of human rights abuses.
The Alien Tort Statute, 28 U.S.C. § 1350, gives federal courts jurisdiction over “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”
The statute provides a mechanism for foreigners seeking accountability in the United States for violations of international law. The reasoning is that unless the U.S. government provided a path within its own justice system to hold violators of international law accountable, foreign nations might instead hold the United States itself to blame.
The question then is whom does the statute allow to be held accountable? As noted by the U.S. Supreme Court, the wrong answer to this question could transform a law intended to “promote harmony in international relations” into one creating “the very foreign-related tensions that … Congress sought to avoid.”
Part of the Judiciary Act of 1789, the Alien Tort Statute remained largely ignored for nearly two centuries before a Second Circuit Court of Appeals case in 1980, Filártiga v. Peña-Irala. The court allowed a Paraguayan family — unable to adequately pursue their case in their own country — to sue a former Paraguayan police official living in New York for allegedly torturing their son to death in Paraguay for opposing that country’s government. The Second Circuit held that torture violated the law of nations and could trigger jurisdiction under the Alien Tort Statute.
Over the next two decades, the federal courts grappled with how to interpret the scope of the statute. They looked beyond torture to consider other international law violations, including genocide, summary execution, forced disappearances, terrorism and war crimes. The courts also addressed whom could be sued, as critics became increasingly uncomfortable with suits brought against multinational corporations.
However, it was not until 2004 that the Supreme Court weighed in on the scope of the law. Seeking to rein in an expansive reading of it, which might otherwise allow judges to create a host of new causes of action beyond what Congress had intended, the court held in Sosa v. Alvarez-Machain that the Alien Tort Statute authorized actions for violations of “a very limited category” of universally recognized and clearly defined norms of international law.
"This split was fueled by views that allowing such cases to proceed would be a judicial overstep when the relevant policy matters should be decided instead by Congress."
But the question remained of whom could be held liable. Significantly, a circuit split among the Courts of Appeals emerged as to whether the statute could be used against corporations. This split was fueled by views that allowing such cases to proceed would be a judicial overstep when the relevant policy matters should be decided instead by Congress.
In April, the Supreme Court answered half of the question in Jesner v. Arab Bank. In that case, terrorism victims in the Middle East sued a Jordanian bank under the Alien Tort Statute, alleging that the bank kept accounts for known terrorists, knowingly accepted donations to fund terrorism and distributed payments to families of suicide bombers. In a plurality opinion supported by the conservative justices, the court held that foreign corporations were not liable.
The justices reasoned that permitting a lawsuit against a foreign company would stoke the very tensions in foreign relations that Congress had sought to avoid by passing the law. Instead of simply providing a forum for foreign individuals to seek accountability in the United States for violations of international law, allowing those individuals to sue foreign corporations under the statute could expose businesses to liability they did not face elsewhere in the world.
The court specifically noted that the Jesner litigation had caused diplomatic tensions with Jordan, and said that Congress — not the courts — was better equipped to weigh policy judgments affecting foreign relations.
Importantly, the Supreme Court declined to decide whether the statute gave U.S. courts jurisdiction over claims against domestic corporations. Given the Supreme Court’s current and foreseeable conservative composition, it seems likely that the judicial body would decline endorsing the Alien Tort Statute liability for domestic corporations absent an affirmative and clear answer from Congress.
Until Congress weighs in or the Supreme Court addresses the issue again, there remains no clear answer as to whether a domestic corporation is subject to liability. Given the circuit split on the issue, it could depend on where the suit is filed.
Meanwhile, if not the corporation itself, individual members of management or other employees might still be subjected to liability in their personal capacity. It is critical, therefore, that defense contractors operating with a global reach consider seeking the appropriate legal counsel and guidance regarding the need for a robust compliance program addressing international law concerns, including, but not limited to, the Alien Tort Statute.
Christopher Hale is a partner and Laura Alexander is an associate in the government contracts, investigations and international trade practice group at Sheppard, Mullin, Richter & Hampton LLP. They can be reached at chale@sheppardmullin.com and lalexander@sheppardmullin.com, respectively.
Topics: Defense Contracting, Ethics, Ethics Corner
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