Alien Tort Case Development: Plaintiffs Overcome Presumption against Extraterritoriality, but Still No Corporate Liability in the Second Circuit

On August 24, the Second Circuit Court of Appeals affirmed the dismissal of plaintiffs’ claims in a case filed against Lebanese Canadian Bank pursuant to the Alien Tort Statute (“ATS”). Plaintiffs in the case, Licci et al. v. Lebanese Canadian Bank, allege that the bank facilitated rocket attacks in Israel through the provision of a bank account in New York that allowed for wire transfers on behalf of Hezbollah.

Notably, the Second Circuit found that the plaintiffs had overcome the presumption against extraterritorial application of the ATS, which has applied since the Supreme Court’s 2013 ruling in Kiobel v. Royal Dutch Petroleum.  The Court applied a two-step jurisdictional analysis in determining that plaintiffs had:

  • Step One. Plead conduct that touches and concerns the United States with sufficient force so as to displace the presumption against extraterritoriality; and
  • Step Two. Demonstrated that that same conduct states a claim for violation(s) of the law of nations or aiding and abetting violation(s) of the law of nations.

Specifically, the Court found that plaintiffs had alleged that the defendant bank had engaged in carried out specific banking services in and through the State of New York that facilitated wire transfers between Hezbollah’s bank accounts and that these transfers enabled rocket attacks in Israel. The Court then found that the bank acted intentionally and with the knowledge that its actions would benefit Hezbollah, which had been identified as a terrorist organization by the U.S. Government.

Despite finding that plaintiffs had overcome the presumption against extraterritoriality, the Second Circuit ultimately dismissed plaintiffs’ claims, relying upon its 2010 decision in Kiobel v. Royal Dutch Petroleum in which it found that corporations are not proper defendants in ATS cases. The Court observed that “we are not free to consider” the argument that the 2010 decision was wrongly decided until such time as it is overruled by an en banc panel or by the Supreme Court.

 

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