Alien Tort Case Development: The Second Circuit Assesses the Appropriate Focus of Jurisdictional Inquiries

Alien Tort GavelOn October 23, the Second Circuit Court of Appeals issued a decision in Mastafa v. Chevron Corp., a case filed against Chevron Corp. and BNP Paribas pursuant to the Alien Tort Statute (“ATS”). The court upheld the District Court’s dismissal of the plaintiffs’ complaint. In upholding the dismissal, the court held that the “focus” of the jurisdictional inquiry in ATS cases must be the specific conduct that allegedly violated the law of nations and where that conduct occurred.

The case involves allegations that Chevron and BNP Paribas aided and abetted human rights abuses by representatives of the Government of Iraq during Saddam Hussein’s regime. Plaintiffs specifically alleged that the companies made or facilitated unlawful payments to the Saddam Hussein regime in connection with the regime’s participation in the United Nations’ Oil for Food Programme (“OFP”).

Applying the “touch and concern” standard established by U.S. Supreme Court’s 2013 decision in Kiobel v. Royal Dutch Petroleum, the court stated that the focus of the jurisdictional inquiry in ATS cases should be “solely” the site of conduct that allegedly violated the law of nations, citing both Morrison v. Nat’l Austl. Bank Ltd. (S. Ct. 2010) and Balintulo v. Daimler AG (2d. Cir 2013).

The court stated that a company’s U.S. citizenship was irrelevant to the jurisdictional analysis, explicitly disagreeing with the Fourth Circuit’s identification of corporate citizenship as a relevant factor in determining whether claims touch and concern the United States in the Al Shimari v. CACI decision.

Ultimately, in reviewing what plaintiffs must demonstrate in order to overcome the presumption against extraterritoriality and establish federal subject matter jurisdiction, the court said that plaintiffs must:

  1. plead conduct that touches and concerns the United States with sufficient force to displace the presumption against extraterritoriality; and
  2. demonstrate that that same conduct, upon preliminary examination, states a claim for violation(s) of the law of nations or aiding and abetting violation(s) of the law of nations.

In evaluating the specific claims made by plaintiffs, the court did find that plaintiffs had alleged specific conduct by the defendants that took place in the United States that “appeared” to touch and concern the United States with sufficient force to displace the presumption against extraterritoriality. Specifically, the plaintiffs alleged that Iraqi oil was “purchased and financed” in the United States by Chevron. Similarly, plaintiffs alleged that BNP Paribas had engaged in numerous payments and financing arrangements involving Iraqi oil through the use of a New York-based bank account. Notably, this decision represents only the second time that an appellate court has found that plaintiffs have met the “touch and concern” standard, with the Al Shimari decision representing the first.

The court found, however, that plaintiffs had not demonstrated that defendants’ U.S.-based conduct aided or abetted violations of the law of nations. Specifically, the court held that plaintiffs had not demonstrated that defendants acted with the intent of facilitating human rights abuses. The Second Circuit has held that plaintiffs must show that a defendant acted with the purpose of aiding and abetting violations of the law of nations, not just that a defendant acted with the knowledge that its conduct would facilitate such violations. Presbyterian Church of Sudan v. Talisman Energy (2d. Cir. 2009).

The court found that plaintiffs asserted only that defendant took actions in the United States that knowingly aided and abetted human rights violations by the Saddam Hussein regime, even as part of purposefully violating the terms of the OFP. The court found that any allegations of purpose were made in conclusory terms and failed to establish “the plausibility of a large international corporation intending – and taking deliberate steps with the purpose of assisting – the Saddam Hussein regime’s torture and abuse of Iraqi persons.”

In the recent decision in In re: South African Apartheid Litigation, the court observed that Kiobel “drastically limits the viability of ATS claims based on conduct occurring abroad.” The Second Circuit’s Mastafa decision reflects this reality, as courts continue to limit that types of claims that may serve as the basis for jurisdiction in ATS cases.

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