U.S. Supreme Court to consider scope of the Alien Tort Statute
05 October 2020
There is an important business and human rights case on the docket of the US Supreme Court, which begins its next term on 5 October 2020. The Court has agreed to determine the contested scope of the Alien Tort Statute (ATS) in the context of an appeal by Nestlé USA, Inc., the US affiliate of Swiss-based Nestlé (Nestlé USA), and Cargill, Inc. (Cargill), the largest privately held company in the US.
Nestlé USA and Cargill, together with the Solicitor General, on behalf of the Trump administration, challenge the holding by the Court of Appeals for the Ninth Circuit that US corporations can be held liable under the ATS for aiding and abetting human rights violations abroad by virtue of their corporate conduct in the US.
In the past two decades, plaintiffs have filed more than 150 ATS lawsuits against corporations in over 20 industry sectors for business activities in roughly 60 countries. These potential claims present significant risks for companies operating in, or sourcing products from, jurisdictions where human rights abuses are prevalent.
The Court’s decision on the subject could therefore be a watershed moment for human rights litigation in the United States, either closing the door on decades of plaintiff attempts to use the ATS to assert international law claims against companies or opening it further as a credible basis for such claims. Whatever the outcome, global corporations, especially those with international supply chains, should be alert to the consequences of the decision and the example it will set.