Court of Appeals Rejects ATS Claim Because Defendants’ Conduct, Even Though Sufficiently Connected to the U.S., Did Not Violate International Law

The World in U.S. Courts: Winter 2015 - Alien Tort Statute (ATS)/Torture Victims Protection Act (TVPA)/Victims of Trafficking and Violence Protection Act (VTVPA)/Foreign Sovereign Immunity Act (FSIA) | October.23.2014

Mustafa v. Chevron Corporation, U.S. Court of Appeals for the Second Circuit, October 23, 2014

ATS and VTVPA claims were brought by Iraqi nationals alleged to have been victims of torture, imprisonment, and murder by the Saddam Hussein regime. The defendants Chevron Corporation and Banque Nationale de Paris Paribas were alleged to be liable as a result of their alleged diversion of funds to the Hussein regime via the United Nations’ Oil for Food Program (“OFP”), in contravention of international law.

The Court of Appeals affirmed the dismissal of the plaintiffs’ VTVPA claim because that claim can be brought only against individuals, not corporations.

As to the ATS claim, the Court of Appeals found that, while the complaint adequately alleged a number of jurisdictional prerequisites, it failed to allege conduct in violation of international law with a sufficient connection to the U.S. to be cognizable. Specifically, the Court of Appeals stated that, under the U.S. Supreme Court’s 2013 decision in Kiobel v. Royal Dutch Petroleum Company, the plaintiffs were first required to plead that the defendants’ conduct “touch[ed] and concern[ed] the territory of the United States” sufficiently so as to displace the presumption against the extraterritorial application of U.S. statutes. The focus of the inquiry was on the defendants’ alleged conduct in the U.S., and if a sufficient connection was established the question then became whether that conduct violated international law or could be deemed to have “aided and abetted” such a violation. The corporate citizenship and presence of the defendants in the U.S. was irrelevant, although some other Courts had considered these facts as relevant factors.

In this case, the complaint alleged that many of the decisions and financial transactions giving rise to the alleged violation of the OFP occurred in the U.S., as did administration of the program itself, at the United Nations headquarters in New York. The Court of Appeals concluded that a number of the alleged acts did “touch and concern” the territory of the U.S. sufficiently to “displace” the presumption against extraterritorial application. But it also found that none was sufficiently connected to a violation of International law—i.e., the conduct of the regime of Saddam Hussein—to support a claim. The Court of Appeals summarized the Complaint as alleging that the defendants “purposefully” violated the OFP, but only “knowingly” aided the Hussein regime’s abuses. Because the alleged violation of international law required that a defendant’s conduct be “purposeful”—in other words, that the defendants purposefully aided in the violation of international law—the Court of Appeals concluded that their mere “knowing” assistance was inadequate to state a claim.

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