Supreme Court Holds Foreign Corporations Cannot Be Held Liable For Terrorism Claims

Apr 24, 2018
Originally published on April 24, 2018 1:08 pm

The U.S. Supreme Court ruled Tuesday that foreign corporations cannot be sued for damages in U.S. courts for aiding in terrorist attacks or other human rights violations. The vote was 5-to-4.

Writing for the conservative majority, Justice Anthony Kennedy said the"courts are not well suited to make the required policy judgments implicated by corporate liability in cases like this one."

Rather, the political branches — Congress and the executive — should deal with these issues, he said.

The court's ruling came in a case brought against the Jordan-based Arab Bank by victims of terrorist attacks in Gaza and on the West Bank. The survivors of and relatives of those killed in the attacks say that the bank, which has a branch in New York, facilitated the attacks by "transferring funds to terrorist groups in the Middle East."

They sued in the U.S. under the Alien Tort Statute, a law enacted in 1789 that was aimed originally at piracy but authorizes suits to be brought in U.S. courts for violations of international law.

The court majority, however, said that while the purpose of the statute was "to promote harmony" in international relations, the Arab Bank case and others like it produce contrary results.

For 13 years, the court observed, this case has caused "considerable diplomatic tension with Jordan, a critical ally that considers the ATS litigation an affront to its sovereignty."

And that was not the purpose of the first Congress, which enacted it.

Although all five of the court's conservative justices signed onto the court's bottom line, three of them — Justices Clarence Thomas, Samuel Alito and Neil Gorsuch — would have gone even further in closing the door to any new type of lawsuits under the statute. Each of them wrote separately to say as much.

The court's four liberal justices dissented. Writing for them, Justice Sonia Sotomayor said that "by categorically foreclosing corporate liability," the court "absolves corporations from responsibility under the ATS for conscience-shocking behavior."

Joining her dissent were Justices Stephen Breyer, Ruth Bader Ginsburg, and Elena Kagan.

The Arab Bank lauded the decision. It wrote in a statement:

"Arab Bank is pleased with the Court's decision, which ends this litigation and affirms the Bank's belief that there is no basis to hold corporations liable under international law. The Bank looks forward to focusing its full attention on its business, its commitment to safe and sound banking and its dedication to the service of its customers across the globe."

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