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Rights questions remain in top court ruling for Shell

A Shell logo is seen at a petrol station in London January 31, 2013. REUTERS/Luke MacGregor
A Shell logo is seen at a petrol station in London January 31, 2013. REUTERS/Luke MacGregor

By Lawrence Hurley

WASHINGTON (Reuters) - In a closely watched ruling that left many questions unanswered, the Supreme Court said on Wednesday that federal courts do not have jurisdiction to hear lawsuits against foreign corporations accused of aiding in human rights abuses abroad.

In one of its biggest human rights cases in years, the justices ruled unanimously that a federal court in New York could not hear claims made by 12 Nigerians who accused Anglo-Dutch oil company Royal Dutch Shell Plc of complicity in a violent crackdown on protesters in Nigeria from 1992 to 1995.

The ruling immediately sparked another debate, not least in concurring opinions written by justices in response to Chief Justice John Roberts' majority opinion, about exactly what claims can still be made under the Alien Tort Statute. The 1789 law had been dormant for nearly two centuries before lawyers began using it in the 1980s to bring international human rights cases in U.S. courts.

What is clear is that the ruling is a major win for such non-U.S.-based multinational companies as Royal Dutch that do business in the developing world and become embroiled in local political controversies. Those companies, which are still subject to suit in foreign courts, fear U.S. courts because of the possibility of large damage awards.

The ruling is likely to affect other cases, including those involving similar claims against Anglo-Australian mining giant Rio Tinto Plc over its conduct in Papua New Guinea, and against Exxon Mobil Corp over its activity in Indonesia.

Esther Kiobel, the named plaintiff in the Royal Dutch case and now a U.S. citizen, brought her lawsuit in 2002 on behalf of victims of the crackdown in Nigeria, including her husband, Barinem, who was executed in 1995.

Chief Justice John Roberts wrote in the majority opinion that a presumption against extraterritorial application of federal laws applies to the Alien Tort Statute.

The court did not decide the question originally before it in the case: whether corporations can ever be liable under the statute.

DIFFERENCES OF OPINION

Although all nine justices concurred with the outcome, only four agreed with the chief justice's reasoning. Justice Stephen Breyer wrote a separate opinion in which he was joined by three other justices.

Roberts wrote that "nothing in the text of the statute suggests that Congress intended causes of action recognized under it to have extraterritorial reach."

He also said the ruling leaves open some lawsuits under the Alien Tort Statute, including against corporations, as long as there is a sufficient connection with the United States. The claims must have "sufficient force to displace the presumption" against extraterritorial application, he added.

Addressing liability of companies that are either based in the United States or have considerable interests there, Roberts said that "it would reach too far to say that mere corporate presence suffices."

Justice Anthony Kennedy and Justice Samuel Alito wrote separately in agreement with Roberts, with both making clear that the court had not resolved for good the question of under what circumstances individuals and corporations can be liable.

Kennedy said the court had been "careful to leave open a number of significant questions" concerning certain claims, although he did not elaborate exactly what they might be.

Alito said he agreed with the chief justice's opinion "as far as it goes."

In Alito's opinion, joined by Justice Clarence Thomas, an Alien Tort Statute claim can proceed if there is U.S.-based conduct that can overcome the presumption against extraterritoriality.

In his concurring opinion, Justice Breyer said he would not have applied the presumption against extraterritoriality. Regardless, he noted, in the Shell case, "the parties and relevant conduct lack sufficient ties to the United States."

Sandy Weisburst, one of Royal Dutch's lawyers, said the ruling was a "vindication of Shell's primary position in this case." Future cases against other defendants would, he said, determine "when is there sufficient U.S. conduct" to give U.S. courts jurisdiction.

Paul Hoffman, the lawyer representing the plaintiffs, said it "seems pretty clear" that corporations are covered by the statute and "there will be corporate cases in the future" in some circumstances.

The case is Kiobel v. Royal Dutch Petroleum Co, U.S. Supreme Court, No. 10-1491.

(Reporting by Lawrence Hurley and Jonathan Stempel; Editing by Howard Goller, John Wallace and Steve Orlofsky)

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