Foreign corporations can’t be sued under ATS: USSC

The United States Supreme Court ruled that foreign corporations cannot be sued in United States by foreign victims of human rights abuses and extremist attacks under the Alien Tort Statute (“ATS”)

“As demonstrated by this litigation, foreign corporate defendants create unique problems. And courts are not well suited to make the required policy judgments that are implicated by corporate liability in cases like this one,” Justice Anthony Kennedy wrote for the majority.

The victims claim that Arab Bank, a Jordanian financial institution with a branch in New York, cleared dollar-denominated transactions that benefited terrorists through the Clearing House Interbank Payments System (CHIPS) and laundered money for a Texas-based charity allegedly affiliated with Hamas.

The Court observed ATS was intended to promote harmony in international relations by ensuring foreign plaintiffs a remedy for international-law violations when the absence of such a remedy might provoke foreign nations to hold the United States accountable. But here, and in similar cases, the opposite is occurring. Petitioners are foreign nationals seeking millions of dollars in damages from a major Jordanian financial institution for injuries suffered in attacks by foreign terrorists in the Middle East. The only alleged connections to the United States are the CHIPS transactions in Arab Bank’s New York branch and a brief allegation about a charity in Texas. At a minimum, the relatively minor connection between the terrorist attacks and the alleged conduct in the United States illustrates the perils of extending the scope of ATS liability to foreign multinational corporations like Arab Bank.

The Court said that, absent congressional instructions, its recent precedents cast doubt on the authority of courts to extend or create private causes of action even in the realms of domestic law.

About DSLegal

A full service international law firm based in New Delhi with an office in Chicago, USA.
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