In a major ruling with wide implications for corporations that operate overseas, a divided federal appeals court in Washington today said Exxon Mobil Corp. is not immune from liability for alleged brutal conduct that agents of the company allegedly orchestrated against a group of Indonesian villagers.
The plaintiffs, 15 Indonesian villagers, sued Exxon in two actions in U.S. District Court for the District of Columbia, claiming government security forces, working for Exxon, killed and tortured villagers in Aceh, Indonesia.
The villagers, represented by Cohen Milstein Sellers & Toll, alleged Exxon employed Indonesian military as private security to protect a natural gas facility. The plaintiffs’ lawyers argued Exxon had control over the soldiers.
“The law of the United States has been uniform since its founding that corporations can be held liable for the torts committed by their agents,” Judge Judith Rogers of the U.S. Court of Appeals for the D.C. Circuit said in the opinion, joined by Judge David Tatel. “This is confirmed in international practice, both in treaties and in legal systems throughout the world.”
The majority judges—Judge Brett Kavanaugh voted in dissent—sent the case back to Washington federal district court for further proceedings. The initial suit has been pending for a decade.
Cohen Milstein’s Agnieszka Fryszman, who argued for the plaintiffs in the D.C. Circuit in January, praised the D.C. Circuit’s ruling, calling it a “big and significant win that makes our case much stronger than it was before the appeal.”
“The ability to hold companies accountable, and the threat of the statute being out there, is an important check on conduct,” Fryszman said. “There is nothing unfair about holding a company accountable on its own home.”
O’Melveny & Myers partner Sri Srinivasan, who argued for Exxon, referred comment to Exxon. An Exxon spokesman said the company is reviewing the decision.
"We have fought these baseless claims for many years. The plaintiffs’ claims are without merit," the statement said. "While conducting its business in Indonesia, ExxonMobil has worked for generations to improve the quality of life in Aceh through employment of local workers, provision of health services and extensive community investment. The company strongly condemns human rights violations in any form."
Writing in dissent, Kavanaugh said the Alien Tort Statute does not reach conduct that occurs in a foreign country. The statute, the judge said, gives aliens access to federal courts for action that occurred in the United States.
“The presumption helps the United States avoid conflicts with other nations, which of course have a strong interest in policing and regulating conduct in their own countries,” Kavanaugh said. “The ATS contains no textual indication that it was meant to apply to conduct in foreign countries.”
Kavanaugh noted that the U.S. Court of Appeals for the 2nd Circuit recently ruled that the Alien Tort Statute does not apply to corporations. The judge also said the United States government has expressed concern that allowing the tort claims to proceed with harm foreign policy interests.