Transnational

Lawsuits brought by plaintiffs’ class action firms, public interest attorneys, and non-governmental organizations against U.S. companies or foreign companies with a substantial U.S. presence are sometimes premised on alleged injuries that occurred abroad. Such lawsuits raise the question of whether U.S. courts should be the venue for cases concerning conduct occurring outside U.S. borders.

Some of these cases are filed in federal courts under the 200-year old Alien Tort Statute (ATS), which provides federal jurisdiction over lawsuits brought by non-U.S. nationals for torts in violation of international law. Others are brought under state common law or in foreign jurisdictions, including countries with poorly developed legal systems, only to return to courts in the United States. This practice is known as Foreign Judgement Enforcement.

This area of litigation has developed into a business for plaintiffs’ lawyers who try to cash in against multinational companies using the U.S. legal system. Many of the suits take many years, halting international investment and imposing substantial legal and reputational costs on corporations.

To prevent abusive forum shopping, federal and state courts should exercise caution in interpreting and applying state law, even state common law, and extraterritoriality. States should strengthen their foreign judgment recognition and enforcement laws and Congress should adopt uniform federal standards to govern the recognition and enforcement of foreign judgments.

 

Alien Tort Statute (ATS)

Enacted in 1789 as part of the Judiciary Act, the Alien Tort Statute (ATS) provides federal jurisdiction over lawsuits brought by non-U.S. nationals. The ATS was intended to give federal courts of the new nation the power to resolve disputes arising from a very limited number of international law violations, such as piracy or assaults on ambassadors on U.S. soil.

Despite its original intent, the ATS has served for the past two decades as the fountainhead of litigation against multinational companies for human rights violations allegedly committed by foreign governments or other foreign actors in countries all over the world.

The U.S. Supreme Court has issued two important opinions restricting the ATS. Kiobel v. Royal Dutch Petroleum (2013) limited its extraterritorial scope and Jesner v. Arab Bank (2018) restricted corporate liability. These rulings have substantially limited the use of the ATS in transnational cases; however, this does not deter cases brought under state common law or through foreign judgment enforcement.

 

Foreign Judgment Enforcement (FJE)

In recent years, plaintiffs have filed numerous lawsuits against businesses and individuals in U.S. courts for alleged conduct occurring outside the U.S. The Supreme Court’s recent rulings limiting such cases including Daimler AG v. Bauman (2014), Kiobel v. Royal Dutch Petroleum (2013), and Morrison v. National Australia Bank (2010) will likely mean a new strategy for plaintiffs and their lawyers: bring lawsuits in foreign courts, attempt to enforce any judgments in those foreign courts in U.S. courts, and seize companies’ U.S. assets. This raises the troubling prospect of abusive and improper foreign judgments being enforced in the U.S.

To prevent abusive forum shopping, States should strengthen their foreign judgment recognition and enforcement laws. Congress should also adopt uniform federal standards to govern the recognition and enforcement of foreign judgments.

01/01/2019

Suggested Resources

Research

All Results for Transnational

  1. Improving the Environment for Business in Australia

    September 12, 2013 | Research

    In recent years, the use of third party litigation financing ("TPLF") in Australia has resulted in a notable proliferation of class actions and other funded lawsuits. The growth of the lawsuit investment industry has occurred largely without government oversight, giving rise to serious issues yet to be addressed. As a result, the increase in TPLF-financed litigation has in turn increased the cost of doing business in Australia, a trend which will continue if the current situation remains unchanged.... Read More

  2. Australian Press Highlights New ILR Proposal for Reforming Oversight of Third Party Litigation Financing

    September 12, 2013 | News and Blog

    In recent years, the use of third party litigation financing ("TPLF") in Australia has resulted in a notable proliferation of class actions and other funded lawsuits.... Read More

  3. U.S. Chamber Commends Supreme Court for Reining In Abuses of Alien Tort Statute

    April 17, 2013 | Press Release

    Decision limits the ability of plaintiffs to import foreign lawsuits into U.S. courts... Read More

  4. In the News Today - March 24, 2014

    March 24, 2013 | News and Blog

    "We're particularly concerned about developments here in third-party litigation financing," ILR president Lisa Rickard told the Australian Financial Review. ... Read More

  5. Stopping the Sale on Lawsuits: A Proposal to Regulate Third-Party Investments in Litigation

    October 24, 2012 | Research

    Third-party investments in litigation represent a clear and present danger to the impartial and efficient administration of civil justice in the United States. Such third-party litigation financing ("TPLF") occurs when a specialized investment company provides money to a plaintiff (or counsel) to finance the prosecution of a complex tort or business dispute. In exchange for this financial assistance, the plaintiff (or counsel) agrees to pay the investor a portion of any proceeds obtained through the litigation.... Read More

  6. Litigation Funding in Australia: Identifying and Addressing Conflicts of Interest for Lawyers

    February 08, 2012 | Research

    Litigation funding in Australia is a contractual arrangement whereby a third party (usually a corporate entity and not a legal practitioner) provides financing and some level of management of the dispute, and in return, if the case succeeds, receives a percentage of the proceeds. Litigation funding has been argued to be an important and legitimate development that provides access to justice, allows for the spreading of the risk of complex litigation and can improve the efficiency of litigation by bringing commercial considerations to bear. Equally there have been concerns that litigation funding results in the Court's processes being misused for commercial gain.... Read More

  7. U.S. Chamber Applauds Introduction of FOCUS Act in U.S. Senate

    February 03, 2012 | Press Release

    WASHINGTON, D.C.-Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR), made the following statement about the introduction of the Freedom from Over-Criminalization and Unjust Seizures (FOCUS) Act of 2012 in the U.S. Senate. The bill would, among other things, amend the Lacey Act to remove foreign law violations as a basis for prosecution in the United States and limit punishment for violations under the Act to civil penalties. ... Read More

  8. Confronting the New Breed of Transnational Litigation: Abusive Foreign Judgments

    October 26, 2011 | Research

    This article demonstrates why comity - when properly understood - requires that U.S. courts deny recognition and enforcement to foreign judgments that violate the U.S. Constitution and other deeply rooted domestic principles.... Read More

  9. Think Globally, Sue Locally: Out-of-Court Tactics Employed by Plaintiffs, Their Lawyers, and Their Advocates in Transnational Tort Cases

    June 21, 2010 | Research

    There has been a sharp rise in lawsuits brought against United States companies, as well as foreign companies with a substantial U.S. presence, that are premised on alleged personal or environmental injuries that occur overseas. Most of those transnational tort lawsuits have been filed in the United States by plaintiffs' class action firms, public interest attorneys, and Non-Governmental Organizations ("NGOs"); some have been brought in federal courts, while many more have been filed in state courts under traditional bases of jurisdiction. A growing number of notable actions also have been filed in foreign courts, with the plaintiffs seeking to obtain judgments they can enforce in the United States.... Read More

  10. Third Party Financing: Ethical and Legal Ramifications in Collective Actions

    November 19, 2009 | Research

    This paper begins with an overview of third party litigation financing. It next examines the current third party financing practices of a number of European jurisdictions. Then, it sets forth ILR's critique of the practice, particularly the incentives it creates to engage in frivolous and abusive litigation. ILR also presents a case study of the Commonwealth of Australia, the first jurisdiction to permit third party litigation funding, where such funding has dramatically increased litigation and given investors pervasive - even total - control over a claimant's case. Finally, the paper concludes that such funding should be prohibited altogether in collective litigation.... Read More