Jesner v. Arab Bank, PLC – SCOTUS Must Stand Up to Corporate Power

With the Trump administration plagued by accusations of conflicts of interest and corporate influence over government at an all-time high, the issue of corporate power returns again to the Supreme Court of the United States (SCOTUS).

In Jesner v. Arab Bank, PLC, SCOTUS has been asked to decide whether the Alien Tort Statute (ATS), which permits foreigners (both individuals and corporations) to sue for violations of customary international law, can be used against corporations. Despite the statute’s long history of corporate suits, this is not the first time that this question has come before SCOTUS, although initially, the Court chose to punt the issue in favor of a ruling on extraterritoriality.

In Jesner, victims of terrorism and their families have sued Arab Bank for providing financial services to terrorist organizations. A jury has already ruled in favor of the American victims, but the foreign victims had to sue under a different law, the ATS. Now Arab Bank is trying to evade responsibility by arguing that it, as a corporation, cannot be held liable under the statute.

SCOTUS has another opportunity to rule on whether the third branch of democratic government, the judiciary, will go the way of the other two, or whether it will say no to corporate power, choosing people over profits. The International Corporate Accountability Roundtable (ICAR), the Interfaith Center on Corporate Responsibility, and the Service Employees International Union have filed a joint amicus curiae brief on behalf of the petitioners to assist the Court in doing exactly this. The brief makes a number of public policy arguments and highlights how corporate liability under the ATS protects investors.

Corporations Cannot Have Rights Without Responsibilities

The role of corporations in society has become more prominent than ever. Corporate expansion has been driven by globalization, the liberalization of markets, and technology, which permit corporations to operate across borders and markets with ease, granting them significant power. In addition, corporations have been held to have all manner of rights that enable them to operate effectively as citizens. For instance, in 2010, in the well-known Citizens United case, SCOTUS recognized that for-profit corporations can engage in political speech.

As corporations are understood to hold many of the same rights as individual citizens, so too must they bear the same responsibilities. Rights without such responsibilities leads to significant unfairness and tips the scales of justice so in favor of corporations as to undermine the very notion of justice itself.

Righting Wrongs and Encouraging Good Behavior

Corporate liability under the ATS is also required to ensure access to remedy for victims of corporate abuses. Both international and U.S. law provide that where there has been a wrong, there must be a remedy. For individuals located in countries lacking the rule of law, the ATS may be the only way to receive compensation for corporate abuses. Corporate liability under the ATS will also help to protect these individuals by encouraging good corporate behavior and ensuring that corporations respect international law.

In contrast, denying liability not only leaves a vacuum in which corporations can violate the law, but it creates perverse incentives. Incorporation must not be a defense in its own right. Such a defense would be arbitrary and would lead to a system in which anyone can evade liability for violations of international law simply by incorporating, resulting in corporate immunity.

Conclusion

The last time SCOTUS was asked to decide this question, it acknowledged that the purpose of the ATS included “a distinct interest in preventing the United States from becoming a safe harbor (free of civil as well as criminal liability) for a torturer or other common enemy of mankind.” We must tell SCOTUS to say no to corporate power and choose people over profits. Only then can we ensure that the United States does not become an attractive place to evade liability for anyone and everyone who files some papers and pays a small incorporation fee.

For more information about the case or to get involved in the campaign to tell SCOTUS to choose people over profits, contact Heather Cohen, Legal & Policy Associate, at heather@icar.ngo.

For their assistance with the brief, ICAR gratefully acknowledges its pro bono counsel, Daniel Rosenthal and Kathy Krieger of James & Hoffman, P.C., as well as the expertise of its team of advisors, Gwynne Skinner, Cynthia Williams, and Adam Kanzer.

Heather Cohen, Legal & Policy Associate