All eyes are once again on the Supreme Court of the United States (SCOTUS) as it turns its attention to the application of the Alien Tort Statute (ATS) to companies accused of complicity in human rights violations committed abroad.

The ATS, a federal law enacted in 1789, gives U.S. federal courts jurisdiction over “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” (28 U.S.C. § 1350). More simply put, the ATS enables foreign / non-U.S. nationals to bring civil claims in U.S. courts for torts committed against them in violation of customary international law, although since SCOTUS’ decision in Kiobel v Royal Dutch Shell Co, the extraterritorial reach of the ATS has been severely curtailed.

Largely overlooked for two centuries, the ATS drew increased interest after it was invoked for the first time in 1980 against a U.S. resident who had allegedly tortured the plaintiffs’ relative, on the basis that torture violated the “laws of nations” (Filartiga v Pena-Irala).

Many more cases followed Filartiga, but the question of whether a corporation (as opposed to a natural person) can be held liable under the ATS remained unanswered.

That has once again been put to SCOTUS in the case of Jesner v Arab Bank, oral arguments for which were heard on Wednesday (11 October). The plaintiffs –  victims of terrorist acts in Israel, the West Bank and Gaza between 1995 and 2005 – claim that Arab Bank violated the “law of nations” by using its New York branch to process U.S. dollar-denominated transactions that financed these terrorist acts and so-called “martyrdom payments” to families of terrorists.

The plaintiffs point to the text, history and purpose of the ATS in support of their claim that the ATS – as originally drafted and now – extends to corporations. The absence of specificity in the definition of defendants under the relevant provision of the ATS indicates, they say, that the drafters of the ATS did not intend to limit the category of defendants to natural persons. Going further, the plaintiffs argue that corporate liability is necessary to give effect to the purpose of the ATS: to provide effective compensation for, and deterrence from, violations of the law of nations. In the specific context of the case, corporate liability is the “only meaningful option” to effectively enforce the international norms implicated by the financing of terrorist activity.

In response, Arab Bank draws attention to the absence of any precedent for corporate liability under customary international law, which they rely on to argue that corporations cannot be held liable for “violations of the law of nations” under the ATS.

Jesner v Arab Bank highlights the important question of whether it is appropriate to rely on domestic law to found a cause of action for a violation of an international norm to which corporations are not directly subject. Indeed, opinion in the international legal community is divided on this issue, some arguing that the question of who is liable is indivisible from the scope of the underlying substantive liability. Others see no problem with separating the question of whether the substantive “law of nations” has been violated (a matter of international law) from the question of how such violations may be enforced in particular domestic contexts, for example by creating a cause of action in tort – as the ATS does. The questions raised by SCOTUS during oral arguments on Wednesday revealed a potential difference in opinion among the Justices.  Justices Sotomayor and Kagan appeared to accept a distinction between whether conduct constitutes a violation of an international norm and who can be held liable for such a violation (which may differ between domestic systems). By contrast, Justice Kennedy considered the question of who could be liable as equally “normative”, given its effect on the behaviour of potential defendants.

The implications of Jesner v Arab Bank do not stop at the question of corporate liability under the ATS. There is also the question of whether the actions complained of (processing foreign transactions in dollars through U.S. branch) are sufficiently connected to the U.S. Interestingly, the federal government argued in an amicus brief filed in June that the clearance of transactions denominated in dollars should not be sufficient in isolation to found a claim under the ATS.

SCOTUS’ decision in Jesner v Arab Bank is therefore much anticipated in the U.S. and beyond, its impact likely to extend to other parts of the international legal community where the scope of corporate liability for human rights abuses abroad is increasingly being tested.

Watch out for our future post reporting on SCOTUS’ decision (not expected until 2018).