WASHINGTON (Reuters) - Conservative U.S. Supreme Court justices on Wednesday signalled concern about allowing companies to be sued under American law for human rights abuses abroad in a case involving allegations that Arab Bank Plc ARBK.AM helped finance militant attacks in Israel and the Palestinian territories.
Chief Justice John Roberts and Justice Samuel Alito, both conservatives, indicated that U.S. foreign policy tensions that could arise from such cases would be a reason to curb corporate liability. Conservative Justice Anthony Kennedy, who often casts the deciding vote in big cases, also appeared sympathetic to the bank’s arguments.
Their remarks during an hour of arguments in the case raised the possibility that the court, with a 5-4 conservative majority, could rule in favour of the Jordan-based bank in the lawsuit seeking to hold it financially liable for the Islamist attacks.
The court’s four liberals indicated that corporations should not be immune. Even if the court ruled in favour of the roughly 6,000 plaintiffs suing the bank, the lawsuit could still be dismissed on other grounds once it returns to lower courts.
The plaintiffs, appealing a lower court’s ruling blocking the suit, have accused the bank of being the “paymaster” behind attacks including suicide bombings because of its role in processing certain financial transactions. The plaintiffs include relatives of non-U.S. citizens killed in attacks and survivors of the incidents.
The plaintiffs said Arab Bank used its New York branch to transfer money that helped Hamas and other groups fund attacks and reward families of the perpetrators between 1995 and 2005.
The underlying legal question is whether corporations can be sued under a U.S. law called the Alien Tort Statute, which dates to 1789. In recent years, human rights lawyers have used it to seek damages against companies in U.S. courts for human rights violations abroad.
A ruling that eliminates corporate liability would further limit the reach of that law, which was already narrowed by a 2013 Supreme Court ruling.
“I’m concerned about the foreign entanglement issue,” Roberts told the plaintiffs’ lawyer, Jeffrey Fisher.
Roberts said upholding corporate liability could lead to a “problematic result” by increasing foreign policy frictions with other countries such as Jordan, which filed a brief saying that holding the bank liable would undermine the kingdom’s relationship with the United States.
Kennedy echoed arguments made in the bank’s court papers, indicating he agrees that obligations imposed by the “law of nations, which gives rise to international human rights claims, generally apply to nations and sometimes individuals, but not corporations.”
But liberal Justice Elena Kagan said it makes little sense to bar lawsuits against companies while allowing them against individuals, including corporate executives.
“Why on Earth would you draw a distinction of this kind?” Kagan asked the bank’s lawyer, Paul Clement.
The lead plaintiff in the Arab Bank case is Joseph Jesner, whose British citizen son was killed at age 19 in a 2002 suicide bombing of a bus in Tel Aviv. The bank said in court papers that the U.S. government has called it a constructive partner in the fight against terrorism financing.
In its 2013 ruling, the Supreme Court did not resolve the corporate liability question when it ruled in favour of Royal Dutch Shell Plc over a lawsuit claiming the company was complicit in a crackdown on protesters in Nigeria.
The justices instead narrowed the law’s reach, saying claims must sufficiently “touch and concern” the United States to overcome the presumption that the Alien Tort Statute does not cover foreign conduct. A 2015 Chamber of Commerce study said that in the two years after that ruling, 70 percent of lawsuits under the Alien Tort Statute were dismissed on those grounds.
In a separate case, a New York jury in 2014 found Arab Bank liable for facilitating two dozen militant attacks in Israel.
A ruling is due by the end of June.
Reporting by Lawrence Hurley; Editing by Will Dunham