Blurring the Line between Criminal and Civil Liability of Corporations in Jesner v Arab Bank

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This post is the second in the Jesner v Arab Bank special series on this blog. The first one is here.

It is a pleasure to welcome back Alessandra De Tommaso as a guest poster on ‘Rights as Usual’. Alessandra is a PhD candidate at Middlesex University School of Law in London. She works on the challenges arising from corporate criminal liability under international criminal law. This post is hers.

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On 24 April 2018, the U.S. Supreme Court delivered its opinion in the case Jesner v Arab Bank, closing the door to future litigation against foreign corporations under the Alien Tort Statute (ATS). For those who believe in corporate accountability for human rights violations, this decision is a setback. But irrespective of one’s views, the decision is also incorrect. This post focuses on the Court’s misguided use of the practice of international criminal tribunals to exclude the possibility to sue (foreign) corporations under the ATS. It argues that international tribunals’ lack of authority to impose criminal liability on legal entities cannot be used as a reason to foreclose the civil liability of corporations at the domestic level.

The majority’s opinion in Jesner opens with a discussion on whether “the law of nations imposes liability on corporations for human-rights violations”. In reaching the conclusion that there is no international norm of corporate liability, the majority applies the same reasoning adopted by the Court of Appeals for the Second Circuit in its 2010 decision in Kiobel. Since none of the existing international criminal tribunals included corporations in their jurisdiction, the liability of business entities for human rights violations must be excluded under international law. In the words of the majority:

“The international community’s conscious decision to limit the authority of [existing] international tribunals to natural persons counsels against a broad holding that there is a specific, universal, and obligatory norm of corporate liability under currently prevailing international law.” (Kennedy, J., opinion, 15)

Here the Court confuses the lack of a mean of enforcement at the international level with the absence of an international norm (see Dr. Nadia Bernaz’s post here). But leaving aside this misconception, the majority’s reasoning is erroneous from another perspective. The Court does not take into consideration that the international tribunals mentioned in the judgement have the authority to impose criminal liability only. Civil liability is not addressed in the statutes of any of these tribunals; neither was it discussed during the negotiations leading to their adoption. This point was correctly raised by Ambassador David J. Scheffer in his Brief as Amicus Curiae of 26 June 2017. Nonetheless, the Court assumed that the lack of an enforcing mechanism able to impose criminal liability on legal entities at the international level can affect the possibility of imposing civil liability at the domestic level. In doing so, the Court fails to distinguish between criminal liability under international criminal law, on one side, and civil liability under national law, on the other. A distinction that is particularly relevant in the context of corporate liability. Indeed, while corporate criminal liability is still a controversial legal concept and has yet to be recognised under international criminal law, the civil liability of companies is a general principle of law recognised worldwide. Yet the majority refuses to acknowledge such a fundamental distinction.

To conclude, it is incorrect to assume that the exclusion of corporate criminal liability from the statutes of international criminal tribunals forecloses the possibility to hold corporations civilly accountable at the domestic level. The Court’s argument on this point of law is flawed. As correctly observed by Judge Sotomayor in the minority opinion:

“… taken to its natural conclusion, the plurality’s focus on the practice of international criminal tribunals would prove too much. No international tribunal has ever been created and endowed with jurisdiction to hold natural persons civilly (as opposed to criminally) liable, yet the majority and respondent accept that natural persons can be held liable under the ATS.” (Sotomayor, J., dissenting, 9)