Lawsuits brought by plaintiffs’ class action firms, public interest attorneys, and non-governmental organizations against U.S. companies or foreign companies with a substantial U.S. presence are sometimes premised on alleged injuries that occurred abroad. Such lawsuits raise the question of whether U.S. courts should be the venue for cases concerning conduct occurring outside U.S. borders.
Some of these cases are filed in federal courts under the 200-year old Alien Tort Statute (ATS), which provides federal jurisdiction over lawsuits brought by non-U.S. nationals for torts in violation of international law. Others are brought under state common law or in foreign jurisdictions, including countries with poorly developed legal systems, only to return to courts in the United States. This practice is known as Foreign Judgement Enforcement.
This area of litigation has developed into a business for plaintiffs’ lawyers who try to cash in against multinational companies using the U.S. legal system. Many of the suits take many years, halting international investment and imposing substantial legal and reputational costs on corporations.
To prevent abusive forum shopping, federal and state courts should exercise caution in interpreting and applying state law, even state common law, and extraterritoriality. States should strengthen their foreign judgment recognition and enforcement laws and Congress should adopt uniform federal standards to govern the recognition and enforcement of foreign judgments.
Alien Tort Statute (ATS)
Enacted in 1789 as part of the Judiciary Act, the Alien Tort Statute (ATS) provides federal jurisdiction over lawsuits brought by non-U.S. nationals. The ATS was intended to give federal courts of the new nation the power to resolve disputes arising from a very limited number of international law violations, such as piracy or assaults on ambassadors on U.S. soil.
Despite its original intent, the ATS has served for the past two decades as the fountainhead of litigation against multinational companies for human rights violations allegedly committed by foreign governments or other foreign actors in countries all over the world.
The U.S. Supreme Court has issued two important opinions restricting the ATS. Kiobel v. Royal Dutch Petroleum(2013) limited its extraterritorial scope and Jesner v. Arab Bank (2018) restricted corporate liability. These rulings have substantially limited the use of the ATS in transnational cases; however, this does not deter cases brought under state common law or through foreign judgment enforcement.
Foreign Judgment Enforcement (FJE)
In recent years, plaintiffs have filed numerous lawsuits against businesses and individuals in U.S. courts for alleged conduct occurring outside the U.S. The Supreme Court’s recent rulings limiting such cases including Daimler AG v. Bauman (2014), Kiobel v. Royal Dutch Petroleum (2013), and Morrison v. National Australia Bank (2010) will likely mean a new strategy for plaintiffs and their lawyers: bring lawsuits in foreign courts, attempt to enforce any judgments in those foreign courts in U.S. courts, and seize companies’ U.S. assets. This raises the troubling prospect of abusive and improper foreign judgments being enforced in the U.S.
To prevent abusive forum shopping, States should strengthen their foreign judgment recognition and enforcement laws. Congress should also adopt uniform federal standards to govern the recognition and enforcement of foreign judgments.
This paper explores the effect of the U.S. Supreme Court's Kiobel decision on Alien Tort Statute (ATS) litigation in lower courts, and how lower courts have struggled to determine whether Kiobel permits U.S. corporations to be sued under the ATS for alleged torts in foreign countries. Read More
This collection of essays examines the shifting legal landscape of federal claims by foreign plaintiffs in the federal courts and focuses on the most common statutes invoked by foreign plaintiffs, as well as the threshold issues of personal jurisdiction and pleading standards that govern such suits. Read More
The High Court of Australia ruled yesterday that courts have no power to order class members to pay a portion of their recoveries to litigation funders, which Law.com says could be "a major blow" to the industry.... Read More
In another welcome sign, the Advisory Committee on Civil Rules for the U.S. courts announced this week that it will continue to study the effects of third party litigation funding (TPLF) in civil litigation and the potential need for a disclosure requirement. ... Read More
Third party litigation funding-the practice of hedge funds investing in litigation in exchange for a cut of the proceeds-has begun to take root in Europe. Unfortunately, an almost total lack of transparency and regulation means that even as its supporters promise greater "access to justice," TPLF threatens the integrity of European civil justice systems. This ILR research paper details the state of play for TPLF in Europe and around the world, and urges EU legislators to take up a number of specific reforms to protect consumers and businesses.... Read More
Last week, the U.S. Chamber Institute for Legal Reform (ILR) submitted comments to the State Bar of California regarding potential rules changes that accentuate our long-standing concerns about third party litigation funding.... Read More
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The 2019 Lawsuit Climate Survey: Ranking the States was conducted for the U.S. Chamber Institute for Legal Reform by The Harris Poll to explore how fair and reasonable state liability systems are perceived to be by U.S. businesses.