In Aziz et al. v. Alcolac, Inc. et al, 1:09-cv-00869-MJG (4th Cir. Sept. 19, 2011), a three-judge panel of the United States Court of Appeals for the Fourth Circuit unanimously held that Shearman & Sterling client Alcolac, Inc. is not liable under the Torture Victim Protection Act (“TVPA”) or the Alien Tort Statute (“ATS”) for allegedly aiding and abetting Saddam Hussein’s mustard gas attacks on Iraqi Kurds. The appellate decision is significant because the federal circuit courts of appeals have divided on four questions under the TVPA and ATS, and the Shearman & Sterling victory counters a recent trend in which the Seventh and District of Columbia Circuits ruled in favor of imposing liability on corporations for alien tort claims (the Seventh Circuit in an influential opinion by Judge Posner). Shearman & Sterling Washington, DC partners Stephen J. Marzen, Jonathan L. Greenblatt and Christopher M. Ryan and Washington, DC associate Sean G. Arthurs represented the appellee, Alcolac, Inc., a subsidiary of Shearman & Sterling client Rhodia, S.A.

In Aziz, the Fourth Circuit held that corporations such as Alcolac could not be held liable under the TVPA and that the Kurdish plaintiffs failed to meet the proper standard for alleging accessorial liability under the ATS. On the TVPA, the Fourth Circuit held that the statute imposes liability only on human beings and not corporations. The Ninth and District of Columbia Circuits agree with that conclusion; the Eleventh Circuit disagrees.

On the ATS, the Fourth Circuit held that the ATS imposes liability on corporations for aiding-and-abetting violations of international law, but only if the attendant conduct is “purposeful.” This ruling aligns the Fourth Circuit with recent rulings in the Second Circuit but splits with the District of Columbia Circuit. The federal circuit courts also disagree on the antecedent question whether corporations are liable under the ATS, with the Second Circuit holding against liability and the Seventh and District of Columbia Circuits holding in favor. On the question of whether the ATS permits the imposition of aiding-and-abetting liability, the U.S. Solicitor General filed a brief in the Supreme Court at the petition stage urging that the ATS authorizes no such liability.

The Fourth Circuit’s decision is a substantial victory for Shearman & Sterling client Alcolac and deepens the divide among the federal circuit courts of appeal on the issues under the TVPA and ATS. The Supreme Court will likely take up one or more of the four questions on which the circuit courts have divided in a coming term.