By Jonathan Kolieb
Cynthia Banham wrote an insightful piece on this blog regarding the US Supreme Court’s Kiobel decision, which was handed down in April this year. The Court’s decision is of tremendous significance to the future of corporate accountability for heinous crimes. Indeed, the Kiobel decision, arguably, has a far greater impact on international, non-US firms than it does on US companies. On that basis, I would like to continue the conversation on this blog regarding corporate accountability in a post-Kiobel era that Cynthia has eloquently kicked off. To do so, I provide a few disconnected thoughts on the case from an Australian perspective. The judgment was influenced by Australian-linked developments, and it will have direct implications for Australian companies and potentially for our courts as well.
The 2013 judgement in Kiobel v. Royal Dutch Petroleum greatly narrows the scope of the Alien Tort Statute (ATS) – a little used, 33 word provision of a law passed by the first US Congress in 1789:
The district courts shall have original jurisdiction of 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.
In the last few decades, human rights activists and victims of alleged corporate misconduct have used the ATS to pursue compensation claims against large trans-national companies in US courts. The victims were, more often than not, non-US citizens; the alleged misconduct was often committed outside the US; and claims were pursued even against non-US companies. The ATS was a powerful tool for corporate accountability, with seemingly global reach.
All that has changed with the judgment in Kiobel.
NAB: Breaking Up – the Link between Foreign Misconduct and US Courts
An entirely unconnected case brought against the National Australia Bank provided the vital precedent upon which the majority in Kiobel based their decision. NAB had been sued for fraud under US securities law, relating to the 2001 multi-billion dollar write-down of the value of assets of a Florida mortgage servicing company that it had recently purchased. Justice Scalia, who wrote the Supreme Court’s majority opinion in Morrison v. NAB, found that US securities law does not apply to non-US securities – i.e., it does not apply extraterritorially, overturning a long-standing precedent to the contrary. In Kiobel, Chief Justice Roberts quotes approvingly from the core determination of the NAB judgment that ‘when a statue gives no clear indication of an extraterritorial application, it has none.’
This formed the basis upon which Chief Justice Roberts and the majority of the court based their Kiobel decision, finding that despite references to ‘alien’, ‘law of nations’ and ‘treaty of the United States’ in its text, because the ATS does not explicitly state that it has extraterritorial effect, it has none. The presumption against extraterritorially was not rebutted by anything in the text of the ATS or the historical intentions of Congress in drafting it. On this basis, Roberts sought to break the ATS away from universal jurisdiction and end its recent popularity as a legal vehicle to pursue corporate accountability in US courts for alleged misconduct committed in foreign countries by foreign corporations against foreign victims.
Australian Companies Breathing a Sigh of Relief
ATS litigation has also been aimed at Australian companies. Rio Tinto is the defendant in a high-profile and decade-long ATS claim (Sarei v. Rio Tinto) that alleges the company was complicit in significant environmental damage and human rights abuses committed by Papua New Guinean forces during an uprising on the island of Bougainville, where Rio’s Panguna mine – the world’s largest open-pit copper and gold mine—is located.
The dispute has been winding its way through US lower courts, with conflicting judgments along the way. Rio has appealed the latest decision to the US Supreme Court. Subsequent to the Kiobel decision, the US Supreme Court has declined to hear the case and instead sent it back to a lower court for review.
Based on the Kiobel decision, which essentially rejects any basis in the ATS for suing foreign companies that commit abuses in foreign lands against foreign victims in US courts – it is unlikely that the claim against Rio will now be successful.
Australia: The New Land of Opportunity for Corporate Accountability Claims?
From the perspective of the victims of human rights abuses, as well as their civil society supporters and advocates, the injustices they have experienced have not gone away. The narrowing of the potential for litigation under the ATS following the Kiobel judgment will not make these cries for justice simply disappear. Rather, victims will pursue other avenues – both within courts of law and the courts of public opinion – to have their claims appropriately addressed. And at least some of these victims (past and future), may find a more amenable judicial system here in Australia to pursue their claims against corporate offenders. Australian civil and criminal law both offer possibilities for ATS-style claims. For the sake of space, I will focus on some of the promising criminal law possibilities, but Australian tort law may also present avenues for litigation against Australian companies that commit abuses abroad, and potentially, even non-Australian companies as well.
Australia’s obligations under the Rome Statute of the International Criminal Court require the incorporation of the international crimes detailed in the Statute into Australian law. These include war-crimes, crimes against humanity, and complicity in such crimes. Incorporation occurred in 2002, meaning these crimes are now not merely international crimes, prosecutable at the International Criminal Court, but also crimes against Australian law, potentially open to be tried in Australian courts.
What is most significant for our conversation on corporate accountability, as Kyriakakis has pointed out, is that unlike the International Criminal Court, which has jurisdiction confined to ‘natural persons’, the Australian legislation does not exempt ‘legal persons’ – that is, corporations. To the contrary, the plain reading of the Australian criminal code explicitly extends jurisdiction for these crimes to natural and legal persons, including corporations (see section 12.1, Criminal Code Act (Cth) 1995).
These Rome Statute provisions of Australian law have yet to be tested in the courts. To date, I am aware of only one prominent case utilising these provisions; that brought against the Sri Lankan President Mahinda Rajapaksa in 2011. A Sri Lankan born, naturalized Australian filed an indictment in the Melbourne Magistrates Court alleging war crimes were committed by Rajapaksa during the Sri Lankan military’s 2009 defeat of the Tamil Tigers. The Attorney-General Robert McLelland declined to proceed with the prosecution, thereby ending it before it had even begun.
This serves as a useful illustration of one of the main obstacles that must be overcome before a successful prosecution can take place: the Attorney-General must approve of the prosecution, otherwise it fails to go forward. S/he need not publicly cite any reasons for disapproving such a case, and as is suggested by the Rajapaksa case, the Attorney-General is likely to be acutely aware of the diplomatic and legal implications of opening Australia’s courts to war crimes claims against foreign heads of state. I dare say that a similar calculus (which might also include consideration of any decision’s economic ramifications), may factor against approving such claims against corporations as well.
Nevertheless, gaining the Attorney-General’s approval is not inconceivable for the pursuit of corporate accountability claims. In the age of social media and of 24/7 all-pervasive media coverage, the political pressure on the Attorney-General would be immense if there was damning, public evidence (think: Youtube video, or Twitter photos) that an Australian corporation had been directly involved or even complicit in war crimes while doing business abroad.
Of course, this is merely conjecture as the Rome Statute provisions of Australian law have not been tested in the courts. Moreover, Australia does not have a history of litigating corporate malfeasance committed abroad. Yet, as the US Supreme Court chokes off the bulk of litigation launched under the ATS in their Kiobel decision, the search for more welcoming legal environments to pursue justice for egregious corporate misconduct in global ‘hot spots’ and conflict zones will continue. Ready or not, Australia is on the list of possibilities.