More certainty for foreign corporations under Alien Tort Claims Act

By Rachel Nicolson
Government Human rights obligations International Business Obligations Litigation

In brief

Since a landmark decision has narrowed available claims against defendants under the Alien Tort Claims Act for alleged violations of customary international law, US courts have sought to clarify exactly what geographical connection is required to justify a claim against corporate defendants. Partner Rachel Nicolson, Senior Associate Hilary Birks and Lawyer Freya Dinshaw look at a recent US Supreme Court decision that tests the waters of the new framework.

How does it affect you?

  • Case law since Kiobel v Royal Dutch Petroleum Company1 confirms that a claim against a foreign corporation by a foreign defendant where the relevant acts occurred outside the US is unlikely to succeed in US courts.
  • The Supreme Court has provided further clarity on what constitutes a sufficient territorial nexus to the US for multinational corporations, noting that considerations of corporate presence in other jurisdictions may be relevant.
  • Key questions of the types of claims that can be brought under the Alien Tort Claims Act2 (the ATCA) and whether such claims can be brought against corporations are still to be resolved in the aftermath of Kiobel.


For background on the ATCA and the Kiobel judgment, please see our US Supreme Court reins in scope of Alien Tort Claims Act and Corporate liability still uncertain under the US Alien Tort Claims Act.

The case of Daimler AG v Bauman3 was commenced in Californian courts in 2004 by 22 residents of Argentina, who alleged that Mercedes-Benz Argentina, a subsidiary of the German company DaimlerChrysler Aktiengesellschaft (Daimler), had collaborated with Argentinian security forces during the 'Dirty War' between 1976 and 1983, and engaged in kidnapping, detainment, torture and the killing of workers, including some of the plaintiffs and individuals related to the plaintiffs.

The plaintiffs claimed that the case was sufficiently connected to California, as Mercedes-Benz USA, LLC (MBUSA), also a Daimler subsidiary, had significant dealings there, arising from its distribution of vehicles to independent dealerships. It was submitted that Daimler was vicariously liable for Mercedes-Benz Argentina's acts and that Daimler's presence in California was enough to satisfy jurisdictional requirements.

Daimler succeeded in earlier court hearings to dismiss the motion on the grounds of lack of jurisdiction and the plaintiffs' failure to demonstrate agency (that MBUSA acted as Daimler's agent). However, the Ninth Circuit, upon rehearing, allowed the claim and held that considerations of 'reasonableness' did not bar the exercise of Californian jurisdiction over the case. Daimler petitioned for a further rehearing, but the Ninth Circuit reaffirmed its previous position and denied Daimler's petition.

The Supreme Court then granted certiorari to determine whether 'Daimler is amenable to suit in California courts for claims involving only foreign plaintiffs and conduct occurring entirely abroad'.4

The decision

The US Supreme Court unanimously decided in favour of Daimler. The court's opinion was delivered by Justice Ginsburg (joined by Chief Justice Roberts and Justices Scalia, Kennedy, Thomas, Breyer, Alito and Kagan) and a further opinion concurring in judgment but dissenting in reasoning was delivered by Justice Sotomayer.

The majority held that Daimler's connections to California were insufficient and that the finding of jurisdiction was barred by due process. In order for jurisdiction to be found over Daimler, either:

  • the operations of Daimler in California would have had to be 'continuous and systematic' so that its activities in the State gave rise to the cause of action (described as 'specific jurisdiction'); or
  • Daimler would have had to have had 'continuous corporate operations within a state so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities' (described as 'general jurisdiction').5

The majority held that 'Daimler's slim contacts with the State hardly render it at home there',6 and therefore there was no basis for general jurisdiction (it was noted that specific jurisdiction was never pleaded by the plaintiffs).

The majority considered that a corporation's place of incorporation, or principal place of business, would be sufficient factors to allow jurisdiction and that these clear attributes would, in every case, 'afford plaintiffs recourse to at least one clear and certain forum in which a corporate defendant may be sued on any and all claims'.7 Although these factors are the most satisfactory upon which to base jurisdiction, the majority confirmed that they were not the only sufficient factors and that other substantial corporate activity within a jurisdiction could also be a reason to grant general jurisdiction.

When analysing Daimler's Californian connections, the majority commented:

If Daimler's California activities sufficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every other State in which MBUSA's sales are sizable. Such exorbitant exercises of all-purpose jurisdiction would scarcely permit out-of-state defendants 'to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.8

As there was no basis for finding that Daimler was 'at home' in California, and as the circumstances of the case did not have anything to do with California and had no principal impact on it, the majority considered that the Ninth Circuit had erred in its decision that Daimler was subject to suit in California.

Finally, the majority noted that its decision not to allow jurisdiction over the claim was in keeping with notions of international comity and rapport. It cited its recent decision in Kiobel as support for its conclusion that California should not decide upon the case brought before it, given that it related to events taking place in other countries and between non-US persons.

Justice Sotomayor, although concurring that in the unique circumstances of the case jurisdiction over Daimler should not be granted, disagreed vehemently with the majority's reasoning. Her Honour noted that the majority's reasoning was not that 'Daimler's contacts with California are too few, but that its contacts with other forums are too many'.9 This aspect of the majority judgment, according to Justice Sotomayor, had the effect that multinational corporations would be immune from suit in most jurisdictions despite engaging in significant trade, merely because their activities were widespread across a number of other jurisdictions.

Her Honour held that a more appropriate basis for dismissing the case against Daimler was that the exercise of jurisdiction was unreasonable under the circumstances, given that the plaintiffs had not proved why it was more convenient to litigate in California than in Germany.


Since Kiobel, lower courts have applied more restrictive tests as to jurisdiction requirements, which has resulted in a number of ATCA claims being dismissed or narrowed.10 An exception is the recent decision of the Ninth Circuit in Doe v Nestlé USA, Inc,11 which has allowed a claim by Malian plaintiffs to go ahead against Nestlé, alleging human rights abuses on cocoa plantations in the Ivory Coast.

Daimler demonstrates that claims made against foreign corporations under the ATCA, for acts occurring outside of the US, have limited prospects of success in US courts. As in Kiobel, the Supreme Court has demonstrated that jurisdictional issues and the presumption against extraterritoriality play an important part in the consideration of ATCA claims. While the Daimler judgment remains silent on other open issues in relation to the ATCA, such as whether corporations can be sued for breaches of international law, foreign corporations operating in the US now enjoy greater certainty that a mere corporate presence in the US is not enough to bring a business within the reach of the ATCA.



  1. 569 US ___ (2013).
  2. 28 USC ?1350 (also known as the Alien Tort Statute).
  3. 571 US ___ (2014).
  4. Daimler AG v Bauman 569 US ___ (2013).
  5. Daimler 571 US ___ (2014) at 19-20, citing International Shoe Co v Washington 326 US 310 (1945) at 318.
  6. Daimler 571 US ___ (2014) at 18.
  7. Daimler 571 US ___ (2014) at 19.
  8. Daimler 571 US ___ (2014) at 21, citing Burger King Corp 471 US at 472.
  9. Daimler 571 US ___ (2014) at 2 (Justice Sotomayer).
  10. For example, Sarei v. Rio Tinto, D.C. No. 2:00-cv-11695- MMM-MAN (No. 02-56390); In re South African Apartheid, U.S. District Court, Southern District of New York, No. 02-md-1499 (dismissed against Daimler and Rheinmetall AG); Giraldo v Drummond Company Inc, U.S District Court, Northern District of Alabama, 2:09-CV-1041-RDP.
  11. D.C. No. 2:05-CV-05133- SVW-JTL (No. 10-56739).