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American Companies Not Liable in US Courts for Apartheid Abuses

By Gabriella Khorasanee, JD on August 26, 2013 | Last updated on March 21, 2019

Though apartheid ended in 1994, the wounds are still deep. In what's been over a decade of litigation, South African nationals initiated a lawsuit in 2002 against American companies with subsidiaries in South Africa. The plaintiffs claimed that through their subsidiaries, the American companies aided and abetted the South African government in the violation of international laws by carrying out the apartheid regime.

Putting an end to this politically-fused litigation, the Second Circuit reiterated the Supreme Court's latest holding, that the plaintiffs' claims were barred.

Procedural History

One could get lost in the details of the procedural history of this case. We're going to summarize as follows: Plaintiffs filed claims in 2002, which the district court dismissed for lack of subject-matter jurisdiction. The Second Circuit reversed, and remanded for plaintiffs to amend the complaint. Once amended, the district court rejected many of plaintiffs' arguments, but concluded the case could move forward under agency theory.

The district court denied an interlocutory appeal certification, and defendants petitioned for a writ of mandamus, and in the alternative a putative appeal under the collateral order doctrine.

The appeal was held in abeyance as the court awaited a decision by the Supreme Court, which finally came out four years later in 2013. Throughout, the parties in the suit changed and the defendants that remain are: Daimler, Ford and IBM.

The Alien Tort Statute

Enacted in 1789, the Alien Tort Statute ("ATS") was drafted to prosecute pirates, reports ABC News. Having a bit of a renaissance lately, the ATS was resurrected in recent history to prosecute human rights violations that occurred abroad in the U.S.

Earlier this year, the Supreme Court decided Kiobel v. Royal Dutch Petroleum Co., which squarely held "that federal courts may not, under the ATS, recognize common-law causes of action for conduct occurring in the territory of another sovereign."

Writ of Mandamus

The Second Circuit noted that mandamus relief is granted only "in extraordinary circumstances" with three conditions needing to be met. The court noted that in addition to the three conditions where there are "risks of adverse foreign policy consequences" or where federal judges are placed "in an unusual lawmaking role as creators of federal common law," mandamus relief may be appropriate.

Here, since plaintiffs did not allege that any of the conduct occurred in the U.S., they were barred by the holding in Kiobel. Because mandamus relief requires that there is no other means of adequate relief, the Second Circuit denied the writ. Instead, the court remanded so that defendants could now move for dismissal, because the Kiobel decision provided them an avenue of relief as a matter of law.

Future Implications

The new life that breathed into the ATS seems to have been wiped out by the Supreme Court's recent decision in Kiobel. If foreign nationals want to make a claim in U.S. federal court alleging violations of international law or treaties, they have a steeper hill to climb. This may not seem like the fairest outcome, but it makes the most sense in light of separation of powers and the ability to create foreign-policy.

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