In a decision issued June 17, the US Supreme Court further limited the ability of plaintiffs to seek redress in US courts for human rights abuses that occur overseas, but did not go as far in restricting those suits as some had hoped. In Nestlé USA, Inc. v. Doe, No. 19-416, the Court revisited the Alien Tort Statute (ATS), a concise 1789 provision that allows federal district courts to hear "any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." 28 U.S.C. § 1350. The Court held that the ATS does not confer jurisdiction over claims against US corporations stemming from injury that occurred overseas if the only domestic conduct consists of "general corporate activity." However, the Court did not hold that the ATS bars suits against all US corporations operating around the globe, as the defendants and some amici had advocated.

In deciding Nestlé USA, the Court did not write on a blank slate. In a series of cases over the past two decades, the Court has gradually narrowed the ATS's scope without closing the door to claims altogether. First, in 2004's Sosa v. Álvarez-Machain, 542 U.S. 692 (2004), the Court held that the ATS is a jurisdictional statute only, and does not itself supply plaintiffs with a cause of action against those who violate international law, id. at 713–14. Then, as now, Congress had only expressly created a private right of action to enforce a single treaty: the Torture Victim Protection Act of 1991, which allows victims of torture or extrajudicial killings to bring suit in the United States under the ATS. See 106 Stat. 73. Nevertheless, the Court explained, the ATS also empowers courts to recognize "a relatively modest set of" common-law international tort claims under US law. Id. at 715–24. The Court did not identify any specific such causes of action beyond three that were recognized at the time of the ATS's enactment—namely, violation of safe conducts, infringement of the rights of ambassadors and piracy. Id. at 715. But it left the door open to future judicially recognized claims based on violation of "the present-day law of nations," so long as those claims "rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to" those three 18th-century offenses. Id. at 725. Under that demanding standard, the Sosa plaintiff's brief, unauthorized detention in Mexico on the orders of US officials did not violate any sufficiently "'specific, universal, and obligatory'" international law norm for the Court to impose liability. Id. at 731–38.

Nearly a decade later, the Court again narrowed the ATS's scope in Kiobel v. Royal Dutch Petroleum, 569 U.S. 108 (2013). There, the Court held that the presumption against the extraterritorial applicability of statutes applies to the ATS, and rejected a suit against two foreign corporations accused of aiding and abetting atrocities committed by Nigerian officials, because all relevant conduct occurred overseas and thus did not "touch and concern the territory of the United States." Id. at 124–25. The defendant companies' mere physical presence in the United States—in the form of a New York office—was insufficient to overcome the presumption and satisfy that test. Id.; see also id. at 139–40 (Breyer, J., concurring in the judgment).

Finally, in Jesner v. Arab Bank, PLC, 138 S. Ct. 1386 (2018), the Court ruled in favor of a Jordanian bank accused of processing financial transactions through its New York branch for terrorist groups that committed attacks in the Middle East, id. at 1394. Further constricting the extraterritorial reach of the ATS, the Court held that foreign corporations are categorically exempt from suit under the law. Id. at 1407.

Against this backdrop, the plaintiffs in Nestlé USA attempted to overcome the strong presumption against extraterritorial application of the ATS by focusing on the US-based activities of corporations that allegedly aided and abetted tortious conduct abroad. There, the plaintiffs were Malian nationals who claim they were forcibly trafficked as children and enslaved on cocoa farms in Côte d'Ivoire. The plaintiffs argued that although the defendant US corporations did not own those farms, they allegedly provided them with resources in the form of training, fertilizer, tools and cash, in exchange for the exclusive right to purchase cocoa, which they then processed and sold in the United States. The plaintiffs sued them for aiding and abetting child slavery, alleging that Kiobel's presumption against extraterritoriality did not bar the claims because the defendants allegedly made their "operational decisions"—including unspecified financial decisions—from their respective corporate headquarters in the United States.

Although the US Court of Appeals for the Ninth Circuit ruled that the claims could proceed under the ATS, the Supreme Court reversed in a decision that further clarifies the US nexus required to establish jurisdiction under the ATS. Writing for the Court, Justice Thomas explained that the Nestlé USA plaintiffs sought improper extraterritorial application of the ATS, because the only relevant alleged domestic conduct by the defendants consisted of "general corporate activity—like decisionmaking—[which] cannot alone establish domestic application of the ATS." Nestlé USA, 2021 WL 2459254, at *3. As the Court further explained, nearly all corporations engage in "operational decisions" from their headquarters, and resting amenability to suit on so thin a reed would render every US corporation subject to suit for overseas injuries. Justice Thomas's opinion leaves open the question of whether specific decision-making activity with a nexus to the challenged conduct abroad could fall outside the scope of such "general corporate activity."

In a final section of his opinion joined only by Justices Gorsuch and Kavanaugh, Justice Thomas explained that he would eliminate courts' power to recognize new common-law torts under the ATS altogether, restricting suits to those asserting the violation of the three 18th-century violations of customary international law identified in Sosa. Id. at *3–6. In arguing for this restrictive reading of the statute, Justice Thomas raised two concerns. First, he opined, courts are ill-positioned to weigh the foreign policy implications of empowering a new group of foreign litigants to bring suit in the United States. Potential ATS liability might discourage US firms and individuals from engaging in international development altogether, including projects in furtherance of US foreign policy. Moreover, Justice Thomas reasoned, the separation-of-powers concerns that underpin the Court's recent jurisprudence restricting plaintiffs' ability to enforce federal statutes that lack an express private right of action apply equally to the creation of new federal causes of action to enforce international human rights or humanitarian law. According to Justice Thomas, if new claims are to be created to enforce international law, Congress is better-placed—and more constitutionally suited—to do so. But only two other justices agreed with this aspect of his opinion.

In a concurrence joined by Justices Breyer and Kagan, Justice Sotomayor disagreed with this latter aspect of Justice Thomas's opinion and noted that it would overrule Sosa "in all but name." Declining to go that far, Justice Sotomayor opined that, although the ATS is merely jurisdictional, Congress expected courts to flesh out common-law causes of action for the violation of international law that could be brought under the statute. As Justice Sotomayor explained, "Congress did not need to legislate those 'causes' into existence because international law supplied the substantive contours of actionable torts, and domestic law indisputably incorporated international law." Nestlé USA, 2021 WL 2459254, at *11. Moreover, she reasoned, courts' refusal to recognize causes of action to vindicate clear rights under international law may do more damage to US foreign policy than restricting the ATS's scope, because "foreign nations may take (and, indeed, historically have taken) umbrage at the United States' refusal to provide redress to their citizens for international law torts committed by U.S. nationals within the United States." Id. at *12.

In the end, the Court's Nestlé USA decision eliminates the US-based "decisionmaking " theory of jurisdiction but nonetheless leaves much to be settled concerning the future application and scope of the ATS. What is clear after Nestlé USA is that to obtain jurisdiction under the ATS for breaches of human rights and other international-law norms overseas, plaintiffs must demonstrate a substantial US nexus that satisfies the "touch and concern" standard under Kiobel and exceeds the type of general corporate activity that failed in Nestlé USA to meet that standard. The mere fact that a defendant is based in the United States and made decisions there about its activities abroad—including, for instance, board of directors meetings or financial and logistical planning by US-based personnel—is insufficient.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.