Value Beyond Price: The Vindication Function of Transnational Litigation

 

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Embedded in a recently decided Supreme Court case about Cuba and the Foreign Sovereign Immunities Act—Exxon Mobil v. Cimex—was a debate about the basic purpose of suing foreign government entities.  The Supreme Court majority rejected the view that such suits are fruitless unless the plaintiff is likely to be able to collect a monetary judgment promptly.  The Court was right to reject that view.  Judgments against foreign sovereign entities can make valuable statements about legally wrongful conduct even when monetary relief is elusive.  A similar dynamic applied to Alien Tort Statute cases; and the demise of such suits, due to a case the Court decided the same day as Exxon, means the loss of their vindicatory function.

The Cimex Decision

In Cimex, the Supreme Court faced a question about the impact of the Helms-Burton Act, which Congress passed in 1996 to increase economic and political pressure on Cuba, on the sovereign immunity of Cuban government entities.  As Jackson Myers has explained, the Helms-Burton Act contains a private right of action authorizing U.S. nationals whose property was unlawfully confiscated by the Cuban government to sue “any person” trafficking in the confiscated property.  The Act defines person to include “any agency or instrumentality of a foreign state.”  Exxon sued Cuban government-owned companies for more than $1 billion, alleging that these entities had unlawfully seized Exxon’s assets in Cuba and profited from those assets.  The issue in Cimex was whether Exxon needed to satisfy the exceptions to foreign sovereign immunity laid out in the Foreign Sovereign Immunities Act (FSIA), such as the commercial-activities or expropriation exception—or whether the Helms-Burton Act sufficed to abrogate the Cuban entities’ sovereign immunity.

Plaintiffs like Exxon, the Court decided, were not required to satisfy a FSIA exception.  In a 6-3 decision by Justice Kavanaugh, the majority centrally reasoned as follows.  Congress in the Helms-Burton Act sought to authorize suits against defendants that included Cuban government entities.  Because it would be exceedingly difficult for American plaintiffs suing Cuban government defendants to satisfy the commercial-activity and expropriation exceptions to the FSIA, mandating that Helms-Burton plaintiffs invoke an exception would annul Congress’s handiwork.  The dissent (by Justice Kagan, joined by Justices Sotomayor and Jackson) countered that the FSIA provided a comprehensive framework governing foreign sovereign immunity and that the Helms-Burton Act did not override that framework with adequate clarity.

The Functions of Transnational Litigation

Tucked into the dueling Cimex opinions was a division over the function of suing foreign government entities in the first place.  The majority, as noted, argued that applying the FSIA framework to Helms-Burton suits would undermine Congress’s goal in the Helms-Burton Act of facilitating remedies for wrongful Cuban confiscation.  The dissent observed that the FSIA, in addition to creating jurisdictional immunity from suit, generally immunizes foreign-state property from attachment and execution.  The FSIA’s execution-immunity rules would continue to govern, the dissent indicated, even if Helms-Burton overrode Cuban government entities’ immunity from suit.  Therefore, Exxon would face serious obstacles in collecting a judgment even if it could sue the Cuban entities.  Why, then, read the Helms-Burton Act to override FSIA immunity from suit in order to give effect to Congress’s aim of providing plaintiffs with relief from unlawful confiscation?  The majority’s approach, the dissent contended, could not advance that aim.

The majority responded:

As Exxon and the U. S. Government both persuasively explained, there can be real value in obtaining a judgment against a Cuban government defendant, even if a plaintiff is unable to immediately collect on that judgment…. For example, depending on future developments in the law or in Cuba, a plaintiff may be able to later collect on a judgment.  Or a judgment (and others like it) may provide further leverage against Cuba and corresponding incentives for Cuba to democratize.

To which the dissent (as relevant) replied:

The majority’s response is that there is “value in obtaining a judgment against a Cuban government defendant” even if there is no apparent path to converting it into money…. But exactly what value? The majority seems to rely mainly on a contingency—that the laws on execution immunity could change some fine day.  The majority also suggests that obtaining a judgment against a Cuban instrumentality will pressure Cuba to democratize, though why a judgment that is unenforceable—so has no monetary consequence—would have that effect is left unexplained.

These passages reveal divergent visions of the purpose of suing foreign government entities.  In my view, the majority had the better of the argument.  Not because Exxon might at some point (or in some country) be able to collect a monetary judgment, although this might be possible—but because judgments against foreign government entities can have beneficial functions beyond a monetary payout.  A judgment can provide vindication to the plaintiff and draw attention to the unlawful act.  A commitment to paying such a judgment could form part of later reforms on the part of the foreign state or could play a role in negotiations between the U.S. and the foreign state.

Indeed, plaintiffs proceeding under the FSIA itself may well find themselves with a judgment they are unable to collect, as in some suits against state sponsors of terrorism.  This does not mean the judgment lacks value—in, say, empowering victims to challenge the conduct of defendants and furnishing a vehicle for victims to make their stories known.  Most relevant to the statutory interpretation question in Cimex, Congress could reasonably make the determination that there are American foreign-policy benefits to highlighting illegal action by designated foreign entities.

The Costs of Cisco

The non-monetary value of suits in the transnational setting also highlights one cost to a decision that the Supreme Court issued on the same day as Cimex: Cisco Systems v. Doe.  This decision was the last in a line of rulings narrowing to the vanishing point the prospect of liability under the Alien Tort Statute (ATS).  The ATS grants jurisdiction to U.S. courts over civil suits by foreigners regarding torts committed in violation of “the law of nations.”  For a time, the ATS was interpreted to permit foreign plaintiffs to sue individuals and companies in the U.S. over alleged human rights violations. The Supreme Court steadily rebuffed that view, culminating in Cisco’s very limited view of ATS liability.  In particular, Cisco held that federal courts could not recognize ATS causes of action beyond three torts identified by William Blackstone (violation of safe conducts, infringements of the rights of ambassadors, and piracy).  The effect is to neuter the ATS as a vehicle for human rights litigation involving, say, claims of torture.

Of course, the Supreme Court may have had reason to interpret the Helms-Burton abrogation of sovereign immunity broadly while narrowly construing the ATS.  Justices taking both positions could argue that the Court was giving effect to congressional legislation in Cimex and declining to insert the judiciary into foreign policy in Cisco.  But one result of Cisco was to close down an avenue for the kind of vindication that the Court’s Cimex decision makes possible in the Cuba confiscation setting.  (For more on the interplay between Cimex and Cisco, see Paul Stephan’s analysis here.)  ATS judgments, even if not collectible, could have provided a way for victims of human rights violations to challenge perpetrators publicly.

Conclusion

ATS suits—and suits against foreign sovereign defendants—do not all serve noble ends.  And adverse foreign-policy consequences, such as damage to American alliances, are worth taking seriously.  Yet the curtailment of the ATS comes at a cost in terms of a feature of transnational litigation that the Supreme Court preserved in Cimex—the potential for non-monetary but genuine value stemming from a court judgment upholding a claim of legal right in a foreign-policy context.