Today is the one-year anniversary of the U.S. Supreme Court’s decision in Kiobel v. Royal Dutch Petroleum Co. In its decision, the Court narrowed the admissibility of Alien Tort Statute (ATS) claims related to extraterritorial human rights abuses, ruling that such claims are not actionable unless the claim has a sufficient nexus to U.S. territory. What kind of nexus is enough for an ATS case arising from exterritorial conduct? For cases involving foreign multinational companies, such as the defendant Royal Dutch Petroleum in Kiobel, a “mere corporate presence” in the U.S. is not enough.
A striking feature of this holding is the clear contrast between how a “mere corporate presence” in the U.S. is not enough for an ATS claim based on extraterritorial conduct, but is sufficient for a Foreign Corrupt Practices Act (FCPA) prosecution. Although Royal Dutch Petroleum’s “mere corporate presence” in the U.S. was not a sufficient basis for an ATS claim, if these human rights abuses were tied to corruption for the retention or solicitation of business in Nigeria (and involved U.S. interstate commerce — a requirement not difficult for the DOJ and SEC to overcome), Royal Dutch Petroleum could be liable for FCPA violations. As a foreign multinational company, Royal Dutch Shell Company lists its shares on the New York Stock Exchange and prepares filings for the SEC. Such activity is sufficient for establishing FCPA jurisdiction.
This suggests a possible strategy for human rights advocates dismayed by the Kiobel decision: Perhaps it might be possible to more aggressively utilize FCPA enforcement for circumstances in which corporate accountability for human rights abuses is tied to bribery.
One possibility is to make use of the whistleblower provision of the Dodd-Frank Act of 2010. Under this statute, any whistleblower that provides high quality, original information to the SEC, which leads to an SEC enforcement action in which over $1,000,000 in sanctions is ordered, the whistleblower is entitled to a monetary award that is between 10% and 30% of the sanctions recovered by the government. Human rights advocates could pursue independent investigations of the practices of multinationals abroad, and if these investigations unearth evidence of FCPA violations in conjunction with human rights abuses, the human rights advocates could act as whistleblowers, and use the award as compensation for those who suffered human rights abuses related to the corrupt conduct. Admittedly, it would be very difficult for a human rights advocate to gain original and high quality information relevant to an FCPA violation in a manner that an employee could. Nevertheless, even though most FCPA actions arise from voluntary disclosures, some have been uncovered by civil society groups. Human rights advocates could focus their fact-finding strategies on local government actors (such as law enforcement) to seek information indicating bribery occurred.
Another possibility worth considering is statutorily mandated restitution. As indicated in a paper I co-authored, “Access to Remedies for Transnational Public Bribery: A Governance Gap,” survivors of human rights abuses tied to foreign public bribery may seek compensation under the Crime Victim’s Rights Act (CVRA) and the Mandatory Victims Restitution Act (MVRA). Under the CVRA, a crime victim has right to full and timely restitution while under the MVRA, courts may order defendants to make restitution to victims of the offense as long as there is a sufficient connection between the crime and the victim’s harm. In the past, US courts have ordered restitution to foreign governments harmed by FCPA violations. Such precedent indicates that obtaining restitution for human rights abuses connected to an FCPA violation, at least under the MVRA, is worth considering. However, most FCPA investigations end in settlements, and restitution under the CVRA and the MVRA is contingent on prosecution.
Human rights advocates could also encourage the DOJ to increase its practice of distributing compensation for corruption. Under the DOJ’s Kleptocracy Initiative, the US has seized and distributed more than $160 million dollars of bribery proceeds laundered in the US to victims in foreign countries since 2004. A similar practice could be expanded for FCPA violations. Professor Andy Spalding recently wrote an interesting post on the FCPA Blog suggesting that FCPA violators could create a settlement fund to compensate corruption victims in an analogous manner to the existing Supplemental Environmental Projects for EPA violations.
The barriers Kiobel established for corporate accountability for extraterritorial human rights abuses call for creative and strategic approaches. Given the FCPA’s jurisdiction over foreign multi-national companies and its governance of extraterritorial conduct and the DOJ and SEC’s resources for enforcing expensive cases, human rights advocates should explore ways to use the FCPA to promote human rights accountability.