The Presumption Against Extraterritoriality vs. the U.S.’s Jurisdiction Over Invasions of its Neutral Rights: Can Chiquita and Balintulo Be Reconciled with the 18th Century Case Law on Extraterritorial Jurisdiction?

In a 2-1 decision issued last month, the Eleventh Circuit granted Chiquita’s motion to dismiss Cardona v. Chiquita Brands Int’l, Inc., a longstanding ATS case brought by four thousand Colombians alleging that, as part of its business operations in Colombia, Chiquita supervised and supplied a campaign of torture and murder conducted by Colombian terrorist organizations. In doing so, the Eleventh Circuit promptly broke the recent trend I sketched out in my previous post, by correctly applying the presumption against extraterritoriality to conclude that the ATS does not confer jurisdiction over “torture [that] occurred outside the territorial jurisdiction of the United States.”

The majority opinion also explicitly rejected the nascent “international rights and obligations” test that the Fourth Circuit applied in Al Shimari. Judge Martin’s dissenting opinion just as explicitly adopted that test, and would have found jurisdiction over Chiquita on the grounds that “the United States would fail to meet the expectations of the international community were we to allow U.S. citizens to travel to foreign shores and commit violations of the laws of nations with impunity.” But writing for the majority, Judge Sentelle (of the D.C. Circuit, sitting by designation) summarily dismissed Judge Martin’s argument as a statement of policy rather than an applicable principle of law, finding that “[e]ven assuming the correctness of the assumption that the present complaint states violations of the law of nations, the dissent’s observation is not relevant to our determination in this case.” In other words: the presumption against extraterritoriality has no relationship with the U.S.’s foreign policy interests in complying with international obligations.

Chiquita is therefore the first firm rejection of the specialized (and misnamed) version of the presumption against extraterritoriality (a.k.a, the PAE-for-ATS) that the lower courts have distilled from Kiobel’s intentionally ambiguous holding. Although the Second Circuit has previously declined to find jurisdiction in a post-Kiobel ATS case on similar grounds, that case, Balintulo v. Daimler, is unlike Chiquita in that the Second Circuit would have reached the same result regardless of whether it applied the PAE or the PAE-for-ATS. In Chiquita, by contrast, application of the PAE-for-ATS should have resulted in a finding of jurisdiction. But the Eleventh Circuit instead took the Supreme Court at its word, and applied the “traditional” PAE.

The allegations in Balintulo were largely premised on a theory of “aiding and abetting” liability arising from the defendants’ foreign investments in apartheid-era South Africa. The Balintulo plaintiffs alleged that the defendants had

committed both direct and secondary violations of the law of nations by engaging in workplace discrimination that mimicked and enhanced apartheid, suppressing union activities, manufacturing military vehicles for the South African security forces in the face of worker protests, and assisting security forces in identifying and torturing anti-apartheid leaders. . . . [B]y providing the computer hardware, software, maintenance, and support necessary for the South African Government to carry out geographic segregation and denationalization. [By] employment practices[ ] which furthered the geographic segregation of the races as well as economic marginalization of black South Africans. . . [B]y supplying vehicles, parts, and other equipment to the apartheid security forces. . . .[B]y providing the computer systems necessary to restrict black South Africans’ movements, track dissidents, and target particular individuals for repressive acts. . . [B]y providing financial support to the apartheid regime and the security forces through the purchase of bonds and the provision of loans, as well as by permitting directors to serve on an advisory board to the South African Defense Forces. . . [And b]y providing armaments and military equipment necessary to suppress dissent, control the population, and carry out extrajudicial killings.

In re S. African Apartheid Litig., 617 F. Supp. 2d 228, 242-43 (S.D.N.Y. 2009).

Despite the fact these torts had occurred in South Africa, the plaintiffs argued that jurisdiction existed “because of the compelling American interests in supporting the struggle against apartheid in South Africa.” In its post-Kiobel decision, the Second Circuit rejected this “American interests” argument:

These case-specific policy arguments miss the mark. The canon against extraterritorial application is ‘a presumption about a statute’s meaning.’ Its ‘wisdom,’ the Supreme Court has explained, is that, ‘[r]ather than guess anew in each case, we apply the presumption in all cases, preserving a stable background against which Congress can legislate with predictable effects.’ For that reason, the presumption against extraterritoriality applies to the statute[.]. . . . Applying this approach in Kiobel, the Supreme Court held as a matter of statutory interpretation that the implicit authority to engage in common-law development under the ATS does not include the power to recognize causes of action based solely on conduct occurring within the territory of another sovereign.

Balintulo v. Daimler AG, 727 F.3d 174, 191-92 (2d Cir. 2013) (emphasis supplied in original) (quoting Morrison v. National Australia Bank, 561 U.S. 247 (2010)).

But while Balintulo rejected application of the PAE-for-ATS, finding instead in favor of applying the traditional PAE, the plaintiff’s claims in Balintulo would not have been cognizable in U.S. courts under either doctrine. The factual allegations in Balintulo did not implicate U.S. responsibility under international law to any significant degree, and certainly not in any way that could be analogized to the kinds of U.S. foreign responsibility under international law that would have been contemplated in 1789. Balintulo is almost entirely premised on the defendants’ passive investment in South Africa during that nation’s domestically initiated apartheid regime. The defendants did not directly implement violations of international law, advocate for violations of international law, or act for the specific purpose of causing those violations to occur. The conduct in that case was also overseen by South African subsidiaries, and not by U.S. corporate entities. The U.S. corporations were enablers, but not directors, of South Africa’s human rights violations.

Chiquita’s role in Colombia was not nearly so passive. The defendant was a single U.S. corporation that actively procured the services of a foreign terrorist organization as part of, and for the benefit of, its independently-run foreign business operations. And those services included breaches of international law.

And beyond the specific factual conduct involved, there existed other important differences between Chiquita and Balintulo that would result in the PAE-for-ATS conferring jurisdiction over the former, but not the latter. The most notable of which would be the starkly opposite positions of the United States government with respect to each case. In Balintulo, as noted by the Second Circuit in its 2013 decision, the U.S. Government had filed a statement of interest in which the executive branch specifically indicated its disapproval of the case being adjudicated by a U.S. court. (Although this statement was originally made in 2003, the U.S. government reaffirmed this position in 2010). In its statement of interest, the executive branch advised the court that it was

concerned that adjudication of the apartheid cases may deter foreign investment where it is most needed. The United States relies, in significant part, on economic ties and investment to encourage and promote change in the domestic policies of developing countries on issues relevant to U.S. interests, such as respect for human rights and reduction of poverty. However, the prospect of costly litigation and potential liability in U.S. courts for operating in a country whose government implements oppressive policies will discourage U.S. (and other foreign) corporations from investment in many areas of the developing world.

Thus, Balintulo did not pass the PAE-for-ATS, as it fails two of the test’s most important factors: the existence of an infringement of the U.S.’s international rights or obligations and the existence of governmental support from other branches of the U.S. government and relevant foreign sovereigns.

But Chiquita, unlike Balintulo, did not involve the conduct of a foreign sovereign, and adjudication of the case by a U.S. court would not have created the potential for conflict with another branch of the U.S. government. In fact, the executive branch had, only a few years previously, successfully brought a criminal action against Chiquita for precisely the same conduct that formed the basis of the Chiquita plaintiff’s civil suit. And, unlike the Balintulo defendants, who had knowledge that they were conducting business in a state that violated international law but did not directly benefit from those violations, Chiquita intentionally procured terroristic acts for its own commercial benefit, in order to ensure that Chiquita could “operate its banana production in an environment free of labor opposition and social disturbances.”

As the Eleventh Circuit correctly concluded, however, none of these factors are relevant to the question of whether the ATS confers jurisdiction over the Chiquita plaintiffs’ claims. Kiobel announced that it was applying the PAE, under which the ATS cannot confer jurisdiction over tortious conduct that occurs on foreign soil.

But while Chiquita is thus consistent with Kiobel, it is not consistent with early U.S. case law on jurisdiction over extraterritorial violations of international law.

In Talbot v. Jansen (1795), for instance, Justice Paterson concluded that:

The principle deducible from the law of nations, is plain; — you shall not make use of our neutral arm, to capture vessels of your enemies, but of our friends. If you do, and bring the captured vessels within our jurisdiction, restitution will be awarded. Both the powers, in the present instance, though enemies to each other, are friends of the United States; whose citizens ought to preserve a neutral attitude; and should not assist either party in their hostile operations. But if, as is agreed on all hands, Ballard first took possession of the Magdalena, and if he continued in possession, and brought her within the jurisdiction of the United States, which I take to be the case, then no question can arise with respect to the legality of restitution. It is an act of justice, resulting from the law of nations, to restore to the friendly power the possession of his vessel, which a citizen of the United States illegally obtained, and to place Joost Jansen, the master of the Magdalena, in his former state, from whence he had been removed by the improper interference, and hostile demeanor of Ballard.

In other words: if you commit, while abroad, a violation of the U.S.’s neutrality, and bring your financial windfall from that violation within the jurisdiction of a U.S. court, jurisdiction over the extraterritorial tort will lie within our courts. And, as Justice Iredell concluded,

[t]hat notwithstanding an apparent contrariety of opinions on this subject, it would be easy to shew, upon principle, if not by authority, that such hostility committed without public authority on the high seas, is not merely an offence against the nation of the individual committing the injury, but also against the law of nations, and, of course, cognizable in other countries: But that is not material in the present stage of the enquiry, which affects only the conduct of our own citizens in our own vessels, attacking and taking, under colour of a foreign commission, on the high seas, goods of our friends.

This is so palpable a violation of our own law (I mean the common law, of which the law of nations is a part, as it subsisted either before the act of Congress on the subject, or since that has provided a particular manner of enforcing it,) as well as of the law of nations generally; that I cannot entertain the slightest doubt, but that upon the case of the libel, prima facie, the District Court had jurisdiction.

What makes Talbot especially significant, for ATS purposes, is that it was an appeal from a district court decision which had invoked both admiralty and the ATS as the source of its jurisdiction to hear the dispute. As such, it is not a leap to suggest that, although the Supreme Court’s decision did not explicitly reference the ATS, its basis for invoking federal jurisdiction can be understood to apply equally to both the Court’s admiralty powers and the subject matter jurisdiction that Congress conferred on it through the ATS.

And the Supreme Court in Talbot specifically found that it had jurisdiction over the case because the case involved an infringement of the U.S.’s neutral rights — that is to say, it created the possibility that the U.S. would become liable to another sovereign (here, the Netherlands) for a breach of the U.S’s international obligations (here, its obligation, as a nation at amity with the Netherlands, to not interfere with its neutral merchants on the high seas). If a French privateer had been responsible for the capture, there would have been no jurisdiction in U.S. courts, because such an act could not have implicated U.S. obligations under international law. But a French privateer had used an American agent in making the capture — and so the capture was not a French prize at all, but a piratical act by a U.S. citizen. And because “the United States ha[s] a neutral character to maintain, and neutral duties to discharge. . . . [b]y respect for our own sovereignty, and by regard to the law of nations,” jurisdiction therefore exists in a U.S. district court to hear a claim by a Dutch citizen for an extraterritorial tort committed by a U.S. citizen operating in a joint venture with a French citizen. Jansen v. the Vrow Christina Magdalena (District of South Carolina, 1794) (finding jurisdiction under the clauses of the Judiciary Act which provide that “[t]he court shall have exclusive original cognizance in all civil causes of admiralty and maritime jurisdiction; and concurrent jurisdiction with the courts of the several states, or the circuit courts of the United States (as the case may be) where an alien sues for a tort only in violation of the law of nations, or a treaty of the United States”).

As noted in L’Invincible, 14 U.S. 238 (1816), this jurisdiction does not extend to every foreign tort for which the monetary spoils can be found in the United States. In particular, its reach does not extend to cases in which there has been no accompanying violation of a U.S. sovereign right:

Every violent dispossession of property on the ocean is prima facie a maritime tort; as such, it belongs to the admiralty jurisdiction. But sitting and judging, as such courts do, by the law of nations, the moment it is ascertained to be a seizure by a commissioned cruiser, made in the legitimate exercise of the rights of war, their progress is arrested, for this circumstance is in those courts a sufficient evidence of right.

But while international law provided that exclusive jurisdiction over a prize goes to the courts of the prize’s captor, there was an important exception to this rule. A neutral court did have authority to inquire into its own jurisdiction over a prize, by investigating whether or not the state’s own international rights and obligations were impacted by the capture:

That the mere fact of seizure as prize does not, of itself, oust the neutral admiralty court of its jurisdiction is evident from this fact, that there are acknowledged cases in which the courts of a neutral may interfere to divest possessions — to-wit, those in which her own right to stand neutral is invaded — and there is no case in which the court of a neutral may not claim the right of determining whether the capturing vessel be in fact the commissioned cruiser of a belligerent power. Without the exercise of jurisdiction thus far, in all cases, the power of the admiralty would be inadequate to afford protection from piratical capture.

L’Invincible (emphasis added).

Although normally the United States was obligated to not interfere in one sovereign’s capture of another sovereign’s ship, interference was not so proscribed when the United States’ neutral rights had been implicated.

In The Divina Pastora (1819), the Supreme Court concluded that U.S. jurisdiction over a tort in violation of international law was dependent upon whether the tort implicated the United States’ obligations or rights under international law. The case was brought by a Spanish Consul in Boston, seeking recovery of a Spanish ship from American “privateers” flying under an Argentinian flag. At that time, Spain was at war with its former colony, and, if an Argentinian ship had seized a Spanish vessel, then Argentina was entitled to a belligerent status, and only Argentinian courts could adjudicate the prize. But the Divina Pastora was not seized by an Argentinian privateer; she was seized by U.S. citizens, acting under color of law of the Argentinian sovereign. As a result,

[The Spanish Consul] contended that the district courts of the United States are courts of the law of nations, and that a general allegation of a marine tort, in violation of the law of nations, is sufficient, prima facie, to give them jurisdiction, where the captured property is brought within our territory. As a general allegation of prize is sufficient, so is a general allegation of an unlawful capture. It then becomes incumbent upon the captors to show, that the capture was made under a commission from a sovereign power in amity with the United States. A neutral tribunal has a right to inquire [w]hether the commission was regularly issued by a competent authority, in order to see whether the capture was piratical, or [whether the capture was] in the exercise of the lawful rights of war. The general rule, unquestionably, is, that the courts of the captor’s country have the exclusive cognisance of all seizures as prize: but to this rule there are exceptions, as ancient, and as firmly established as the rule itself. Among these is the case of a capture made by an armament fitted out or augmented within neutral territory. A capture thus made in violation of the neutral sovereignty, deprives the courts of the belligerent country of their exclusive jurisdiction, and confers it on the courts of the neutral state, who will exercise it by making restitution to the injured party. The acts of congress, and the Spanish treaty, prohibiting the equipment of armed vessels in our ports; and imposing the obligation to restore captures made by them, are merely accumulated upon the preexistent law of nations, which equally prohibited the one, as an injury to friendly powers, and enjoined the other, as a correspondent duty.

But even if this were not the law of nations, the treaty with Spain and the acts of congress make it the law of this court. “Every treaty,” says Sir W. Scott, “is a part of the private law of that state which enters into it.” This principle of public law is expressly recognised by our municipal constitution, in which treaties entered into by the United States, are declared to be a part of the supreme law of the land. [As] [t]he Spanish treaty and the acts of congress pronounc[e] the illegality of captures in violation of our neutrality, [then] the duty to restore the captured property to the original owner follows[] as a corollary. Supposing the allegations to be sufficiently pleaded, the proofs willfully authorize the court in decreeing restitution to the original Spanish owners in this case.

The Supreme Court sided with the Spanish consul, and concluded that U.S. jurisdiction over an extraterritorial breach of international law is entirely proper — even when it might cause a conflict with a foreign sovereign — where that breach of international law also raises a question of the U.S.’s international obligations:

Unless the neutral rights of the United States, as ascertained by the law of nations, the acts of congress, and treaties with foreign powers, are violated by the [defendants’ marine torts], [any marine torts] by them are to be regarded by us as other [torts] are regarded; the legality of which cannot be determined in the courts of a neutral country. If, therefore, it appeared in this case, that the capture was made, under a regular commission from the government established at Buenos Ayres, by a vessel which had not committed any violation of our neutrality, the captured property must be restored to the possession of the captors. But if, on the other hand, it was shown, that the capture was made in violation of our neutral rights and duties, restitution would be decreed to the original owners.

As the Court went on to discuss in a lengthy footnote, the United States’ neutral rights could be impacted by a capture in a number of different fashions. The question of whether there had been territorial conduct — that is, whether the seizure had been made in U.S. territorial waters — was a relevant consideration, but it was far from the only consideration. It was but one basis for U.S. jurisdiction among many:

The capture of a vessel from a belligerent power, by a citizen of the United States, under a commission from another belligerent power . . . is an unlawful capture, and the courts of the United States will decree restitution to the original owner. . . . If the capture be made within the territorial limits of a neutral country, into which the prize is brought, or by a privateer which has been illegally equipped in such neutral country, the prize courts of such neutral country not only possess the power, but it is their duty, to restore the property so illegally captured to the owner. . . . All captures made by means of such equipments of vessels, or augmentation of their force, within the neutral territory, are illegal in respect to the neutral nation, and it is competent for its courts to punish the offenders,

In sum, as these early cases demonstrate, the jurisdiction of a U.S. court to hear a civil claim for violations of international law is not contingent on whether or not that violation had been extraterritorial. The fact that a violation had not been extraterritorial could, indeed, be one such basis for a federal court’s jurisdiction, but it was far from the only one. The violation of the U.S.’s neutral rights was an equally important consideration.

The Kiobel Court’s response to these early cases would likely be that there is a distinction between the high seas and a foreign territory, and that these cases only prove that the ATS should reach conduct that occurred in U.S. territory and the high seas. But Kiobel itself invented this distinction between “foreign territory” and “the high seas” — the PAE previously presumed that statutes are equally inapplicable to all areas that are not U.S. territory, whether the relevant conduct occurred within the territory of a foreign sovereign, the high seas, or terra nullius. See, e.g., Sale v. Haitian Centers Council, Inc. (1993); Smith v. United States (1993). Moreover, the ATS cannot be said to evidence a congressional intent that it apply to the high seas, in addition to U.S. territory. The ATS’s purpose could not have been to extend federal court jurisdiction to breaches of international law on the high seas, as that jurisdiction was already entirely accounted for under admiralty jurisdiction. If anything, ATS jurisdiction should be excluded from conduct occurring on the high seas.

Besides: even though cases like Talbot, L’Invincible, and The Divina Pastora involved conduct on the high seas, the cases themselves make it abundantly clear that this was not the deciding factor. In analyzing their own jurisdiction to hear a case, the federal courts showed, again and again, that the deciding factor was whether the tortious conduct “was made in violation of our neutral rights and duties,” Divina Pastora, as a result of “which [the United States’] own right to stand neutral is invaded.” L’Invincible. Where the U.S.’s international obligations were impacted by a violation of international law, the United States “ha[d] a right therefore to protect its own sovereignty from violation, and to punish the offenders; and, as far as is in its power, to restore the parties injured by the illegal act to the same situation, in which they were before it was committed.” L’Invincible (Circuit Court, D. Mass. 1814).

The Supreme Court’s early decisions, in the decades following the enactment of the ATS, are squarely in line with Judge Martin’s dissent, which found jurisdiction to be sufficiently established where, in its absence, “[t]he United States would fail to meet the expectations of the international community.” Although her 18th century predecessors would have understood it to be a question of the U.S.’s sovereign right to protect its own neutrality, rather than a question of the U.S. failing to meet some affirmative obligation, the ultimate sentiment is the same: where the United State’s international liability has been directly implicated, adjudicative jurisdiction will extend to the underlying tort.

-Susan

One thought on “The Presumption Against Extraterritoriality vs. the U.S.’s Jurisdiction Over Invasions of its Neutral Rights: Can Chiquita and Balintulo Be Reconciled with the 18th Century Case Law on Extraterritorial Jurisdiction?

  1. Don’t worry Susan, we are still in the game in the Chiquita case. Although the panel denied rehearing, we’re hopeful that the full court will rehear it en banc. I think that, at least, Judge Martin will call for a vote on it.

    – Paul

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