New York - On February 28, during oral arguments at the US
Supreme Court in an Alien Tort Statute suit by a group of Nigerians who accused
Shell of complicity in state-sponsored torture in their country, Justice Samuel
Alito interrupted the Nigerians' lawyer, Paul Hoffman of Schonbrun DeSimone
Seplow Harris Hoffman & Harrison.
"What business does a case like this have in the courts
of the United States?" Alito said.
Enough justices agreed with Alito that days after the
argument in the case, called Kiobel v Royal Dutch Petroleum, the supreme court
decided it was more interested in the extraterritorial application of the Alien
Tort Statute than in the nominal issue in Kiobel, which concerned corporate
liability under the ATS.
In an extraordinary post-argument order, the justices called
for additional briefing from both sides on the question of "whether and
under what circumstances the Alien Tort Statute allows courts to recognise a
cause of action for violations of the law occurring within the territory of a
sovereign other than the United States".
Whoever defends South Africa's MTN Group [JSE:MTN] in a new
suit in federal court in Washington is going to be very interested in the
answer the supreme court eventually delivers to that question.
In a 70-page complaint filed on March 28, the Turkish
cellular services company Turkcell is asserting the Alien Tort Statute against
MTN Group. According to Turkcell's lawyers at Patton Boggs, MTN engaged in all
sorts of corporate skullduggery, from bribery to peddling votes at the United
Nations, to wrest away Turkcell's contract to provide private cellphone service
Turkcell said that MTN's conduct is a "violation of the
law of nations", and has demanded $4.2bn in damages.
The Turkish company's allegations were explosive enough to
have led to a 6% fall in MTN's share price since the suit was filed. "MTN
used its high-level political influence within the South African government to
offer Iran the two most important items that the country could not obtain for
itself: (1) support for the Iranian development of nuclear weapons; and (2) the
procurement of high-tech defense equipment," the complaint said.
"MTN developed a scheme to trade these items - nuclear
votes and illicitly procured arms - for (Turkcell's)licence. MTN furthered its
scheme by bribing and trading in influence with government officials in both
Iran and South Africa in exchange for the license...
"MTN went so far as to create a code name for its
corrupt scheme - 'Project Snooker'. Between February 2004 and November 2005,
MTN Group worked feverishly to 'snooker' its business competitor through these
I have no idea of the merits of Turkcell's assertions. But I
don't think Turkcell's case has much chance of surviving as a cause of action
in the US courts, which are increasingly resistant to the idea that they're an
appropriate forum for disputes with little connection to this country.
Turkcell tries hard to make a case for US jurisdiction. (In
fact, I don't think I've ever before seen such a strenuous venue argument in an
opening complaint.) MTN, the suit said, is headquartered in South Africa, but
its shares also trade as American Depository Receipts, and the company derives
significant revenue from sales of phone cards and cell services to US
Two of the company's directors are US residents, according
to the complaint, which also said MTN has received financing from US lenders
and uses US banks. Moreover, according to Turkcell, MTN allegedly breached a
non-disclosure agreement it signed in Washington, in the course of settlement
talks at the beginning of 2012.
All of that doesn't change the fundamentals of the
litigation, however: this is a Turkish company suing a South African company
for allegedly tampering with an Iranian contract through illegal conduct that
took place outside the United States. To quote Alito in the Nigeria case:
"What business does a case like this have in the courts of the United
As an initial matter, MTN is sure to assert a forum non
conveniens defence, arguing that the United States isn't the proper venue for
this case and under the doctrine of international comity, it's not the role of
US courts to decide international disputes.
Turkcell's counsel at Patton Boggs could counter that this
country is the only jurisdiction to offer a civil cause of action for
extraterritorial violations of the law of nations, which is what the MTN suit
As ATS expert Hoffman told me Monday, no court has yet ruled
that the Alien Tort Statute doesn't apply to overseas conduct, however likely
it is that the supreme court will erect such a bar when it eventually decides
But even if the Turkcell case survives outright dismissal,
it will probably be stayed until the supreme court issues its Kiobel ruling,
Hoffman said. If the justices are as reluctant to extend the extraterritorial
application of the Alien Tort Statute as they were of US securities laws in
Morrison v National Australia Bank, that would seem to portend the end of
And even if Turkcell manages to clear all of those hurdles,
there's still a big question about its assertion of the Alien Tort Statute in
what amounts to a business case.
Most ATS cases, after all, are brought on behalf of human
rights victims, not multinational corporations. "The courts are not very
receptive to using the Alien Tort Statute to settle business disputes,"
said Hoffman, pointing back to a 1975 ruling by the 2nd Circuit Court of
Appeals in ITT v Vencap.
I left a message with Turkcell counsel Read McCaffrey of
Patton Boggs but didn't hear back. I also left messages with Lanny Davis of
Dilworth Paxson and Tim Coleman of Freshfields Bruckhaus Deringer; the Turkcell
complaint said that Davis and Freshfields represented MTN in settlement talks
Those messages weren't returned either.
- Reuters Africa News