Corporate Accountability in Conflict Zones: How Kiobel Undermines the Nuremberg Legacy and Modern Human Rights

I.        Introduction

On September 17, 2010, a two-judge majority of the Second Circuit held in Kiobel v. Royal Dutch Petroleum Co. that “corporate liability is not a discernable—much less universally recognized—norm of customary international law that we may apply pursuant to the [Alien Tort Statute].”[1] The Alien Tort Statute (“ATS”)[2] is a well-known tool that grants U.S. federal courts jurisdiction over civil suits brought by aliens for torts committed in violation of international law. The statute has been used for the past three decades to hold perpetrators of human rights abuses accountable in U.S. courts.[3] Some ATS cases have involved conflict zones,[4] and since the mid-1990s, ATS cases have been brought against corporations for their alleged involvement in human rights violations.[5]

Prior to the Kiobel court’s ruling on September 17, no appellate court had ever held that corporations were not subject to suit under the ATS.[6] Indeed, numerous corporate ATS cases had proceeded through the courts with no indication that corporations could not be held liable or that this was an issue of subject matter jurisdiction.[7] By ruling that the scope of liability for a violation of a given international norm does not extend to corporations, the Second Circuit majority, in the words of concurring Judge Leval, “deals a substantial blow to international law and its undertaking to protect fundamental human rights.”[8]

Taking the recent Kiobel decision as a starting point, this article examines the ramifications of the majority opinion with respect to corporate accountability in conflict zones, both in the ATS context and more generally. The article contends that Kiobel is out of step with the historical tradition of the international legal system to fill governance gaps, including by holding actors operating in conflict zones accountable for egregious violations of human rights when domestic systems fail to do so. This tradition dates back at least to the World War II era and the case of I.G. Farben, the largest industrial entity supporting Nazi Germany, which was sanctioned with the corporate death penalty—dissolution—for its participation in violations of international law. The I.G. Farben example clearly illustrates that the international system can regulate corporate actors operating in conflict zones. The article concludes that the implications of Kiobel are profound, as the decision creates unprecedented opportunities for corporate actors to shield themselves from liability for clear abuses of international law through incorporation. Indeed, Kiobel may incentivize the creation of present-day I.G. Farbens, an outcome at odds with jurisprudence in the modern human rights era.

The article begins with a discussion of how the Kiobel decision went off course.[9] First, Part II examines the basic parameters of the international legal system, which establishes a normative framework and leaves enforcement primarily to domestic jurisdictions. Typically, international enforcement mechanisms only play a role when domestic sovereigns fail to act, which commonly occurs in conflict zones. This section also explains how the Second Circuit’s misunderstanding of these basic tenets and its conflation of the normative analysis with the enforcement mechanism analysis led the court to adopt an overly narrow rule at odds with the realities of the international legal system.

Part II then closely analyzes the sanctioning of I.G. Farben, the largest industrial supporter of the Nazi regime. The I.G. Farben example is particularly relevant to notions of corporate accountability in conflict zones. It illustrates how, in the aftermath of World War II, international law approached the question of accountability for a corporate entity when domestic remedies were not available. The Kiobel majority misinterpreted the historical record by relying on I.G. Farben to support its assertion that because the corporate entity itself was not prosecuted criminally at Nuremberg, there is no international consensus that corporations can be held accountable for violations of international law. However, as Part II details, a variety of enforcement mechanisms, both criminal and administrative, were deployed under international law during the post–World War II era to hold both individual industrialists and corporate actors accountable. I.G. Farben received the ultimate penalty when the Allied Control Council ordered it dissolved through Control Council Law No. 9.[10] Thus, the example of I.G. Farben demonstrates that international law has long held corporate entities accountable for egregious violations in conflict zones.

Part III builds on the preceding discussion to illustrate why the international approach to I.G. Farben’s abuses was correct. To leave I.G. Farben without sanction under international law (as the Kiobel majority would) has far-reaching implications for human rights, and international law more generally, in conflict zones. Part III examines the variety of relationships between states and corporations in conflict zones and explores the perverse incentives that the majority’s rule creates. In particular, Kiobel potentially incentivizes states to abdicate state duties to corporations because incorporation may effectively insulate all parties—states, armed groups, and corporations—from liability. As Judge Leval observed, the majority’s rule “offers to unscrupulous businesses advantages of incorporation never before dreamed of.”[11] Incorporation could become a perfect shield for those seeking to commit violations of international law with impunity.

Through Control Council Law No. 9, the Allied Control Council made clear that the dissolution of I.G. Farben was intended to “insure that Germany will never again threaten her neighbors or the peace of the world.”[12] The Nuremberg era laid the foundation for modern human rights. Kiobel profoundly threatens to undermine the Nuremberg legacy, as the decision indicates that some entities—corporations—are beyond the reach of customary international law.

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[1] Kiobel v. Royal Dutch Petroleum Co. et al., No. 06- 4800, 2010 U.S. App. LEXIS 19382, at *1 (2d Cir. Sept. 17, 2010). Nigerian plaintiffs filed Kiobel in 2002, alleging that the Royal Dutch Petroleum Company and Shell Transport and Trading Company, through a subsidiary, collaborated with the Nigerian government to commit human rights violations to suppress lawful protests against oil exploration in the Ogoni region of the Niger Delta. In 2006, the district court granted in part and denied in part the defendants’ motion to dismiss. In particular, the district court granted the motion to dismiss for the claims of aiding and abetting extrajudicial killing, forced exile, property destruction, and violations of the rights to life, liberty, security, and association, holding that customary international law did not define these violations with the specificity required by Sosa v. Alvarez-Machain, 542 U.S. 692 (2004). See Kiobel v. Royal Dutch Petroleum Co., 456 F. Supp. 2d 457, 464–65, 467 (S.D.N.Y. 2006). The court denied the motion to dismiss for the claims of aiding and abetting arbitrary arrest and detention, crimes against humanity, torture, and cruel, inhuman, or degrading treatment. See id. at 465–67. The district court then certified its entire order for interlocutory appeal, finding there were substantial grounds for differences of opinion and that the issues presented were important and could resolve the litigation. The question of corporate liability was not addressed in the district court’s order. The appeal was argued in January 2009.

[2] 28 U.S.C. § 1350 (“The district courts shall have original jurisdiction of 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.”).

[3] See, e.g., Sosa, 542 U.S. 692; Arce v. Garcia, 434 F.3d 1254 (11th Cir. 2006); Hilao v. Estate of Marcos, 103 F.3d 789 (9th Cir. 1996); Abebe-Jira v. Negewo, 72 F.3d 844 (11th Cir. 1996); Kadic v. Karadzic, 70 F.3d 232 (2d Cir. 1995); Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980); Xuncax v. Gramajo, 886 F. Supp. 162 (D. Mass. 1995); Paul v. Avril, 901 F. Supp. 330 (S.D. Fla. 1994).

[4] See, e.g., Kadic, 70 F.3d at 232 (bringing claims for abuses committed during conflict in Bosnia).

[5] See, e.g., Abdullahi v. Pfizer, Inc., 562 F.3d 163 (2d Cir. 2009); Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252 (11th Cir. 2009); Romero v. Drummond Co., 552 F.3d 1303 (11th Cir. 2008); Sarei v. Rio Tinto, P.L.C., 550 F.3d 822 (9th Cir. 2008); Viet. Ass’n for Victims of Agent Orange v. Dow Chem. Co., 517 F.3d 104 (2d Cir. 2008); Khulumani v. Barclay Nat’l Bank Ltd., 504 F.3d 254 (2d Cir. 2007); Aldana v. Del Monte Fresh Produce, N.A., Inc., 416 F.3d 1242 (11th Cir. 2005); Bano v. Union Carbide Corp., 361 F.3d 696 (2d Cir. 2004); Flores v. S. Peru Copper Corp., 414 F.3d 233 (2d Cir. 2003); Doe v. Unocal Corp., 395 F.3d 932 (9th Cir. 2002), vacated on other grounds, 403 F.3d 708 (9th Cir. 2005); Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir. 2002); Bigio v. Coca-Cola Co., 239 F.3d 440 (2d Cir. 2000); Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d Cir. 2000); Jota v. Texaco, Inc., 157 F.3d 153 (2d Cir. 1998).

[6] Just days before Kiobel was decided, a district court in California became the first to dismiss an ATS suit on the grounds that customary international law does not apply to corporations. Doe v. Nestle, S.A., No. 05-5133 SVW, 2010 U.S. Dist. LEXIS 98991, at *192 (C.D. Cal. Sept. 8, 2010).

[7] See Kadic, 70 F.3d at 14.

[8] See Kiobel, 2010 U.S. App. LEXIS 19382, at *113 (Leval, J., concurring). Judge Leval agreed that the complaint should be dismissed, but on the grounds that plaintiffs’ pleadings were inadequate under Twombly. Id. at *247–64 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). However, Judge Leval strenuously disagreed with the majority’s position that corporate liability does not exist under customary international law. Id. at *113.

[9] It is beyond the scope of this article to discuss all the flaws in the Kiobel majority’s legal reasoning. One major issue that this article does not directly address is whether federal common law or international law should resolve questions of corporate liability. Part II only tangentially touches on this question in its discussion of the relationship between the international and domestic legal systems. While the authors do not endorse international law as the proper source of law to decide questions of corporate liability, this article takes international law as its starting point and examines Kiobel’s limitations in this context. For analysis of additional flaws in the majority opinion, see the concurrence of Judge Leval. Kiobel, 2010 U.S. App. LEXIS 19382, at *113 (Leval, J., concurring).

[10] The Allied Control Council was the same entity that established the Nuremberg tribunal through Control Council Law No. 10 to prosecute criminally the Nazi industrialists who ran I.G. Farben. See Control Council Law No. 10, Punishment of Persons Guilty of War Crimes (Dec. 20, 1945), in I Enactments and Approved Papers of the Control Council and Coordinating Committee 306, available at [hereinafter Control Council Law No. 10].

[11] Kiobel, 2010 U.S. App. LEXIS 19382, at *144 (Leval, J., concurring).

[12] Control Council Law No. 9 pmbl., Seizure of Property Owned by I.G. Farbenindustrie and the Control Thereof (Nov. 30, 1945), in I Enactments and Approved Papers of the Control Council and Coordinating Committee 225, available at [hereinafter Control Council Law No. 9].