Today, the Supreme Court of the United States (SCOTUS) will have to decide whether corporations, which have a number of rights, also have responsibilities. On October 11, 2017, SCOTUS will hear oral arguments in Jesner v. Arab Bank, PLC. The case raises the question of whether corporations can be held liable under the Alien Tort Statute (ATS), which permits non-Americans to sue for violations of international law.
The Expansion of Corporate Rights
In today’s globalized world, the role of corporations has become more prominent than ever, expanding well beyond simply providing goods and services. Corporations influence all aspects of society and are increasingly granted extensive rights that enable them to effectively operate as citizens.
The judicial recognition of corporate rights began as early as 1844, but was grossly expanded with SCOTUS’ 2010 decision in Citizens United, which essentially granted corporations the right to unfettered political speech. More recently, in the 2014 Hobby Lobby case, SCOTUS recognized that corporations are entitled to freedom of religion, even where this right might conflict with the rights of their own employees.
In addition to political speech and religious freedom, corporations can sue, they are entitled to the protection of their property and protection from double jeopardy, and their privacy interests have been recognized. These are only a few of the rights granted to corporations by courts, but they clearly demonstrate the extent to which corporations are treated like full-fledged citizens.
With Rights Must Come Responsibilities
Corporate rights must not be divorced from their corresponding responsibilities. This is a matter of restoring balance, reflects the public’s best interest, and is a fundamental principle of corporate law.
Corporate rights without responsibilities creates a bizarre double standard. For instance, if an individual breaks the law, (s)he will face consequences, including the possibility of civil liability. Meanwhile, if the harm was caused by a corporation, its incorporation alone would be sufficient to shield it from civil liability under the ATS. This double standard must not be permitted to stand.
In addition to restoring balance, corporate liability reflects the public interest. This is because corporations are presumably created to benefit the public. When they harm the public or fail to act in its best interest, civil liability is a tool to ensure they are held accountable. Liability regimes create the necessary incentives to encourage corporations to act in the public interest. Without this accountability tool, corporations can abuse the rights of consumers, employees, and others with impunity.
The underlying principles of corporate law, as well as preventing a double standard and the public interest, likewise require that corporations be held liable for their abuses. This responsibility is tied to the rights that stem from corporate existence. Judicial systems all over the world “recognize that corporate legal responsibility is part and parcel of the privilege of corporate personhood.”
SCOTUS has chosen to treat corporations the same as individual citizens. If an individual injured another citizen, (s)he could be sued. Why should the law be any different for corporations?
In 1898, SCOTUS held that corporations could sue under the ATS. It is now being asked whether corporations can be sued under that same statute. The law must apply equally in both directions.
With rights come responsibilities. SCOTUS, through its own decisions, has grown both the role and power of corporations in modern society. At the very least, it must now enforce the clear, established rules for their behavior. Fairness and justice require that SCOTUS uphold the laws that permit the public to hold corporations accountable. It must not foreclose corporate liability under the ATS.
Amol Mehra, Executive Director