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Justices say foreign business can’t be sued under 1700s law

April 24, 2018

WASHINGTON (AP) — The Supreme Court said Tuesday that foreign businesses cannot be sued in U.S. courts by foreign victims of human rights abuses and extremist attacks.

The justices voted 5-4 in favor of the Jordan-based Arab Bank. It was sued by Israeli victims of attacks in the West Bank and Gaza who claim that the bank helped finance the attacks. The victims had tried to use the 18th-century Alien Tort Statute to hold the bank accountable for its role.

But the court’s conservative justices rejected that attempt.

“As demonstrated by this litigation, foreign corporate defendants create unique problems. And courts are not well suited to make the required policy judgments that are implicated by corporate liability in cases like this one,” Justice Anthony Kennedy wrote for the majority.

The decision continues the court’s paring back a three-decade-old strategy by human rights lawyers to use civil suits to pursue individuals who may be responsible for torture and other atrocities, as well as companies with operations in countries with poor records in the area of human rights.

Victims in the case alleged that the bank, through the involvement of its New York branch, knowingly distributed millions of dollars to finance suicide bombings and make “martyrdom” payments to reward the families of militants who killed civilians.

The bank denied the allegations and argued that allowing the victims’ claims to go forward would interfere with U.S. foreign policy and lead to diplomatic friction. Kennedy noted that friction in his opinion, writing that: “For 13 years, this litigation has ‘caused significant diplomatic tensions’ with Jordan, a critical ally in one of the world’s most sensitive regions.”

The Alien Tort Statute, adopted in part to deal with piracy claims, went unused for most of American history until rights lawyers dusted it off beginning in the late 1970s. The Supreme Court cautiously endorsed the use of the law in 2004, but left unanswered precisely who could be held liable and in what circumstances.

In 2013, the justices ruled that people or entities sued under the Alien Tort Statute must have a real connection to the United States. The court declined then to decide whether businesses could be sued.

Justice Sonia Sotomayor wrote in a dissent for herself and three liberal colleagues that the majority’s decision “absolves corporations from responsibility” under the Alien Tort Statute for “conscience-shocking behavior.”

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