Thursday’s landmark Supreme Court decision in Kiobel v. Royal Dutch Petroleum has more relevance to the FCPA and Wal-Mart than you might think.
Kiobel concerned the Alien Tort Statute, a federal law passed in 1789 as part of the Judiciary Act. Its original purpose was somewhat obscure, and the statute lay dormant for nearly two centuries. But in the last thirty years, federal courts began interpreting the ATS to allow foreign plaintiffs to bring claims for human rights violations in U.S. courts. Prospective defendants were any person, natural or legal, with sufficient ties to the U.S. to establish personal jurisdiction. The ATS thus came to be widely regarded as the principal U.S. statute by which corporations could be held accountable for overseas human rights violations.
But last Thursday, the Supreme Court basically shut it down. The problem was that the Court found no evidence that Congress intended the ATS to prohibit conduct occurring in foreign countries. There is a presumption against extraterritorial application, though this presumption can be overcome by a clear Congressional intention to regulate overseas conduct.
Many, both in the U.S. and across the world, are in mourning after Kiobel. What they long for is a U.S. statute with a clear statement of Congressional intent to apply overseas. Ideally, this statute would prohibit conduct that is pervasive across the developing world and contributes substantially to the systematic violations of foreign citizens’ rights. Better yet, this statute would have rigorous enforcement procedures in place with a proven ability to change the way corporations do business.
If such a statute were carefully enforced, with an eye toward actually improving the economic, legal, and social conditions in developing countries, it could be more effective than the ATS ever was and, after
Kiobel, ever will be. That statute would become nothing less than the cornerstone of a worldwide effort to help ensure that international business builds democracies and free markets around the world. In places like Mexico. Or India. Or China and Brazil. If only it existed.
But wait. I think I’ve found it.