Jesner v. Arab Bank, PLC

• Decision Date: 24 April 2018
• Docket Number: No. 16–499.,16–499.
• Citation: 200 L.Ed.2d 612,138 S.Ct. 1386
• Parties: Joseph JESNER, et al., Petitioners v. ARAB BANK, PLC.
• Court: U.S. Supreme Court

138 S.Ct. 1386
200 L.Ed.2d 612

Joseph JESNER, et al., Petitioners
v.
ARAB BANK, PLC.

No. 16–499.

Supreme Court of the United States

Argued Oct. 11, 2017.
Decided April 24, 2018.

Jeffrey L. Fisher, Stanford, CA, for Petitioners.

Brian H. Fletcher, for the United States as amicus curiae, by special leave of the Court, supporting neither party.

Paul D. Clement, Washington, DC, for Respondent.

Michael E. Elsner, John M. Eubanks, Jodi Westbrook Flowers, Motley Rice LLC, Mt. Pleasant, SC, Mark Werbner, Sayles Werbner P.C., Dallas, TX, Jeffrey L. Fisher, David T. Goldberg, Pamela S. Karlan, Jenny S. Martinez, Stanford Law School, Supreme Court Litigation Clinic, Stanford, CA, for Petitioners.

Jonathan Siegfried, Kevin Walsh, Douglas W. Mateyaschuk, DLA Piper LLP (US), New York, NY, Paul D. Clement, Erin E. Murphy, Edmund G. LaCour Jr., Andrew C. Lawrence, Kirkland & Ellis LLP, Washington, DC, for Respondent.

Justice KENNEDY announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I, II–B–1, and II–C, and an opinion with respect to Parts II–A, II–B–2, II–B–3, and III, in which THE CHIEF JUSTICE and Justice THOMAS join.

Petitioners in this case, or the persons on whose behalf petitioners now assert claims, allegedly were injured or killed by terrorist acts committed abroad. Those terrorist acts, it is contended, were in part caused or facilitated by a foreign corporation. Petitioners now seek to impose liability on the foreign corporation for the conduct of its human agents, including its then-chairman and other high-ranking management officials. The suits were filed in a United States District Court under the Alien Tort Statute, commonly referred to as the ATS. See 28 U.S.C. § 1350.

The foreign corporation charged with liability in these ATS suits is Arab Bank, PLC; and it is respondent here. Some of Arab Bank's officials, it is alleged, allowed the Bank to be used to transfer funds to terrorist groups in the Middle East, which in turn enabled or facilitated criminal acts of terrorism, causing the deaths or injuries for which petitioners now seek compensation. Petitioners seek to prove Arab Bank helped the terrorists receive the moneys in part by means of currency clearances and bank transactions passing through its New York City offices, all by means of electronic transfers.

It is assumed here that those individuals who inflicted death or injury by terrorism

138 S.Ct. 1394

committed crimes in violation of well-settled, fundamental precepts of international law, precepts essential for basic human-rights protections. It is assumed as well that individuals who knowingly and purposefully facilitated banking transactions to aid, enable, or facilitate the terrorist acts would themselves be committing crimes under the same international-law prohibitions.

Petitioners contend that international and domestic laws impose responsibility and liability on a corporation if its human agents use the corporation to commit crimes in violation of international laws that protect human rights. The question here is whether the Judiciary has the authority, in an ATS action, to make that determination and then to enforce that liability in ATS suits, all without any explicit authorization from Congress to do so.

The answer turns upon the proper interpretation and implementation of the ATS. The statute provides: "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." § 1350. The Court must first ask whether the law of nations imposes liability on corporations for human-rights violations committed by its employees. The Court must also ask whether it has authority and discretion in an ATS suit to impose liability on a corporation without a specific direction from Congress to do so.

I

A

Petitioners are plaintiffs in five ATS lawsuits filed against Arab Bank in the United States District Court for the Eastern District of New York. The suits were filed between 2004 and 2010.

A significant majority of the plaintiffs in these lawsuits—about 6,000 of them—are foreign nationals whose claims arise under the ATS. These foreign nationals are petitioners here. They allege that they or their family members were injured by terrorist attacks in the Middle East over a 10–year period. Two of the five lawsuits also included claims brought by American nationals under the Anti–Terrorism Act, 18 U.S.C. § 2333(a), but those claims are not at issue.

Arab Bank is a major Jordanian financial institution with branches throughout the world, including in New York. According to the Kingdom of Jordan, Arab Bank "accounts for between one-fifth and one-third of the total market capitalization of the Amman Stock Exchange." Brief for Hashemite Kingdom of Jordan as Amicus Curiae 2. Petitioners allege that Arab Bank helped finance attacks by Hamas and other terrorist groups. Among other claims, petitioners allege that Arab Bank maintained bank accounts for terrorists and their front groups and allowed the accounts to be used to pay the families of suicide bombers.

Most of petitioners' allegations involve conduct that occurred in the Middle East. Yet petitioners allege as well that Arab Bank used its New York branch to clear dollar-denominated transactions through the Clearing House Interbank Payments System. That elaborate system is commonly referred to as CHIPS. It is alleged that some of these CHIPS transactions benefited terrorists.

Foreign banks often use dollar-clearing transactions to facilitate currency exchanges or to make payments in dollars from one foreign bank account to another. Arab Bank and certain amici point out that CHIPS transactions are enormous both in volume and in dollar amounts. The transactions occur predominantly in

138 S.Ct. 1395

the United States but are used by major banks both in the United States and abroad. The CHIPS system is used for dollar-denominated transactions and for transactions where the dollar is used as an intermediate currency to facilitate a currency exchange. Brief for Institute of International Bankers as Amicus Curiae 12–13, and n. 8. In New York each day, on average, about 440,000 of these transfers occur, in dollar amounts totaling about $1.5 trillion. Id., at 14. The "clearance activity is an entirely mechanical function; it occurs without human intervention in the proverbial 'blink of an eye.' " Ibid. There seems to be no dispute that the speed and volume of these transactions are such that individual supervision is simply not a systemic reality. As noted below, substantial regulations govern these transactions, both in the United States and in Jordan.

In addition to the dollar-clearing transactions, petitioners allege that Arab Bank's New York branch was used to launder money for the Holy Land Foundation for Relief and Development (HLF), a Texas-based charity that petitioners say is affiliated with Hamas. According to petitioners, Arab Bank used its New York branch to facilitate the transfer of funds from HLF to the bank accounts of terrorist-affiliated charities in the Middle East.

During the pendency of this litigation, there was an unrelated case that also implicated the issue whether the ATS is applicable to suits in this country against foreign corporations. See Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (C.A.2 2010). That suit worked its way through the trial court and the Court of Appeals for the Second Circuit. The Kiobel litigation did not involve banking transactions. Its allegations were that holding companies incorporated in the Netherlands and the United Kingdom had, through a Nigerian subsidiary, aided and abetted the Nigerian Government in human-rights abuses. Id., at 123. In Kiobel, the Court of Appeals held that the ATS does not extend to suits against corporations. Id., at 120. This Court granted certiorari in Kiobel . 565 U.S. 961, 132 S.Ct. 472, 181 L.Ed.2d 292 (2011).

After additional briefing and reargument in Kiobel, this Court held that, given all the circumstances, the suit could not be maintained under the ATS. Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108, 114, 124–125, 133 S.Ct. 1659, 185 L.Ed.2d 671 (2013). The rationale of the holding, however, was not that the ATS does not extend to suits against foreign corporations. That question was left unresolved. The Court ruled, instead, that "all the relevant conduct took place outside the United States." Id., at 124, 133 S.Ct. 1659. Dismissal of the action was required based on the presumption against extraterritorial application of statutes.

So while this Court in Kiobel affirmed the ruling that the action there could not be maintained, it did not address the broader holding of the Court of Appeals that dismissal was required because corporations may not be sued under the ATS. Still, the courts of the Second Circuit deemed that broader holding to be binding precedent. As a consequence, in the instant case the District Court dismissed petitioners' ATS claims based on the earlier Kiobel holding in the Court of Appeals; and on review of the dismissal order the Court of Appeals, also adhering to its earlier holding, affirmed. In re Arab Bank, PLC Alien Tort Statute Litigation, 808 F.3d 144 (2015). This Court granted certiorari in the...