Dismissal of ATS Claims Against Royal Dutch Shell Upheld

On April 17, 2013, the United States Supreme Court affirmed a September 17, 2010, judgment by the Court of Appeals for the Second Circuit in favor of Cravath clients Royal Dutch Petroleum Co. and Shell Transport and Trading Company, p.l.c. (collectively “Royal Dutch Shell”), upholding the dismissal of plaintiffs’ Alien Tort Statute (“ATS”) claims in a putative class action suit that was filed in late 2002 in the U.S. District Court for the Southern District of New York. Plaintiffs, former residents of the Ogoni region of Nigeria, asserted claims against Royal Dutch Shell under the ATS for allegedly aiding and abetting the Nigerian government in committing violations of the law of nations in Nigeria.

On September 17, 2010, the Second Circuit ruled unanimously in favor of Royal Dutch Shell. Judge Cabranes, joined by Chief Judge Jacobs, held that all of plaintiffs’ claims must be dismissed for lack of subject‑matter jurisdiction because corporations cannot be held liable under the ATS for alleged violations of customary international law. Judge Leval, concurring, concluded that all of plaintiffs’ claims must be dismissed for failure to state a claim on which relief could be granted. On February 4, 2011, the Second Circuit denied the plaintiffs’ petition for rehearing en banc. On June 13, 2011, plaintiffs filed a petition for writ of certiorari to the U.S. Supreme Court. On October 17, 2011, the Supreme Court granted certiorari on the question of whether corporations can be held liable for violations of customary international law. After oral argument on February 28, 2012, the Supreme Court ordered supplemental briefing on whether and under what circumstances courts may recognize a cause of action under the ATS for violations of the law of nations occurring within the territory of a sovereign other than the United States. The case was reargued on October 1, 2012.

In its April 17 decision, the Supreme Court held “that the presumption against extraterritoriality applies to claims under the ATS, and nothing in the statute rebuts that presumption.” Absent a clear indication of extraterritorial application in the statute, “petitioners’ case seeking relief for violations of the law of nations occurring outside the United States is barred.” (Slip op., at 13‑14.) This decision will impact pending and future ATS cases throughout the U.S. courts.

Royal Dutch Shell was represented by Cravath partners Rory O. Millson, Rowan D. Wilson, Michael T. Reynolds and Lauren A. Moskowitz.