Kiobel Reargument, Total Opposes Arctic Drilling as Too RIsky (by Bob Percival)

On Monday October 1 I went to the Supreme Court for the reargument in Kiobel v. Royal Dutch Petroleum Co. The case involves the question whether foreign plaintiffs can sue corporations under the Alien Tort Statute (ATS) for violations of the “law of nations.” Plaintiffs, the survivors of environmental activists in Nigeria who were summarily executed by Nigeria’s military, argue that Shell Oil (Royal Dutch Petroleum) aided and abetted in the executions to silence critics of oil pollution in Nigeria. Plaintiffs are asking the Court to reverse a decision by the U.S. Court of Appeals for the Second Circuit holding that only nations and individuals, but not corporations, can be held liable in tort for violations of international law.

Kiobel was first argued in the Supreme Court on February 28, 2012. A week later the Court announced that it would hear reargument directed to the question whether the ATS "allows courts to recognize a cause of action for violations of the law of nations occurring within the territory of a sovereign other than the United States." This suggested that the Court might not embrace the Second Circuit's notion of blanket corporate immunity for human rights abuses, a proposition rejected by several other U.S. Courts of Appeal. But it also indicated that the Court could hold that a foreign corporation cannot be sued in the U.S. courts under the ATS for violations of the law of nations committed in another country. However, at the reargument it was anything but clear that this is what the Court will do. Several Justices cited the Supreme Court’s 2004 decision in Sosa v. Alvarez-Machain which narrowed the coverage of the ATS, but acknowledged that it could be applied to extraterritorial conduct by foreigners residing in the U.S., including torture and murder in Paraguay, which generated the Second Circuit’s Filartiga decision that gave impetus to modern ATS litigation. While it is difficult to predict how the Court ultimately will rule, the reargument definitely was a good idea. A Court that seemed poised seven months ago quickly to dismiss ATS litigation against corporations, exhibited a deeper appreciation of the ATS and its importance to international human rights than when the case was first argued last February (see blog post of March 5, 2012).

Kathleen Sullivan, representing Shell, did a masterful job at February’s oral argument, but she was constantly on the defensive in yesterday’s reargument. Faced with tough questions from across the ideological spectrum of Justices, she seemed to shift positions to advocating whatever new interpretation of the ATS might get the case against her client dismissed. There was little discussion of exempting all corporations from ATS liability and the historical record provided scant support for the notion that violations of the law of nations that occur abroad cannot give rise to ATS liability. Solicitor General Donald B. Vermilli, Jr. was given ten minutes of argument in support of Shell, but there seemed to be little sympathy among the Justices for his argument that the case did not have enough of a connection to the U.S. to be heard by U.S. courts. Paul Hoffman, arguing for the plaintiffs, reserved an unusually long eight minutes for rebuttal and he used it effectively. He noted that dismissal of this case would mean that a foreign corporation secretly supplying poison gas to Syria to kill dissidents could not be sued in the U.S. by Syrian victims who flee to the U.S. even if it, like Shell, is doing business in the U.S. The briefs of the Netherlands and the UK supporting Shell that had concerned Justice Kennedy at the February argument were characterized as supporting an exhaustion of alternative forum requirement, rather than a blanket dismissal rule. Hoffman also effectively noted that existing doctrine such as forum non conveniens already provided sufficient protection to foreign corporate defendants.

The greatest concern among the Justices sympathetic to Shell was the notion that other countries might cite the ATS as an excuse to permit suits against U.S. corporations in their courts. But a decision foreclosing ATS suits against foreign corporations for conduct outside the U.S. would probably provide considerable succor to rogue governments without deterring them from taking any illegitimate action against U.S. companies.

Last week Christophe de Margerie, the chief executive of the French oil company Total SA, stated that he believed that oil drilling in the Arctic was simply too risky due to the risks of oil spills and the difficulty of containing them in such a harsh environment. The company’s statement, which was welcomed by environmentalists, made front page headlines in the Financial Times. Guy Chazan, Total Speaks Out Against Arctic Oil, FInancial Times, Sept. 28, 2012. Total has investments in some joint oil and gas projects in the Arctic, but it primarily is emphasized developing natural gas resources, which it believes are less risky to the environment. Total’s statement came shortly after France’s highest court upheld the company’s criminal liability, and increased its civil liability, for an oil spill that occurred on France’s Atlantic coastline in 1999.