Kiobel’s first casualty: Turkcell drops ATS bribery case

May 2, 2013

Last April, when the Turkish cellular services company Turkcell filed an Alien Tort Statute suit against South Africa’s MTN Group in federal district court in Washington, I was skeptical. Sure, Turkcell raised salacious allegations about how MTN wrested away its contract to provide cell services in Iran, including supposedly illegal arms deals and vote-peddling at the United Nations. But I said at the time that allegations of corporate corruption aren’t usually the stuff of ATS suits, and, moreover, that the U.S. Supreme Court had already agreed to take up the issue of the statute’s reach beyond U.S. borders in Kiobel v. Royal Dutch Petroleum. I predicted that Turkcell’s case – which was so explosive that MTN’s stock fell 6 percent when it was disclosed – would not survive in American courts.

Yep, this is going to be one of those “I told you so” posts. In October, after the Supreme Court heard oral arguments in Kiobel, U.S. District Judge Reggie Walton stayed the Turkcell litigation until the justices issued a ruling on the extraterritorial application of the ATS. As you know, the Supreme Court finally decided Kiobel in April, ruling that plaintiffs must be able to demonstrate a strong connection between their allegations and the United States to overcome a presumption that the ATS does not apply to overseas conduct. That decision sealed the fate of Turkcell’s suit, which alleged only glancing ties to the United States. On Wednesday, the company’s lawyers at Patton Boggs agreed to dismiss the case. Turkcell hinted in a press release that it would refile its claims in another jurisdiction. (And in fairness, at the time the company sued in federal court in Washington, precedent from the District of Columbia Court of Appeals in Doe v. Exxon Mobil held that the ATS does extend overseas.)

The dismissal on jurisdictional grounds does, however, leave unanswered the other question Turkcell’s case raised: Are bribery and corruption violations of the international law of nations? The Alien Tort Statute was enacted in 1789 to provide a forum for such violations of global standards of behavior, then fell into obscurity. Since its revival in the 1970s, ATS cases have generally involved human rights atrocities, which clearly fall under the international law rubric. Courts were reluctant, however, to permit corporate plaintiffs to make use of the ATS in what boiled down to business disputes.

Turkcell insisted in a response to MTN’s motion to dismiss that its allegations weren’t commercial. “For the last two decades, the law of nations has outlawed corruption and bribery as acceptable ways of doing business,” the Turkish company contended, citing 12 international anti-corruption agreements that have been signed in the last 20 years. “It is clear that the prohibition of corruption is an international norm such that there is ample basis for ATS jurisdiction,” Turkcell wrote. It also pointed to scholarship asserting that bribery of foreign officials was assumed to violate international norms at the time the ATS was passed.

Obviously, this is not the case that will decide whether there’s any validity to Turkcell’s argument. And given the restrictions the Supreme Court placed on use of the ATS, who knows how long it will be until another plaintiff makes the argument? Someone eventually will, though. Wouldn’t it be ironic, in a terrible way, if 20 years from now the ATS has become another way for corporations to sue one another in U.S. courts while foreign victims of human rights atrocities are shut out?

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