Amicus Curiae Brief — Am. Isuzu Motors, Inc. v. Ntsebeza, 128 S. Ct. 2424 (2008) (No. 07-919)

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No. 07-919

' FEB 14 2008

IN THE

|

OFFICE OF THE CLERK

Supreme Court of the Unie eee

in i

AMERICAN ISUZU MOTORS INC., BANK OF AMERICA, N.A.,

BARCLAYS BANK PLC, BRISTOL-MYERS SQUIBB COMPANY,

BP P.L.C., CHEVRONTEXACO CORPORATION, ET AL.,

Petitioners,

—VvV.—

LUNGISILE NTSEBEZA, HERMINA DIGWAMAJE,

KHULUMANI SUPPORT GROUP, ET AL.,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF AMICI CURIAE OF THE CLEARING HOUSE

ASSOCIATION L.L.C., AMERICAN BANKERS

ASSOCIATION, BANKERS’ ASSOCIATION FOR

FINANCE AND TRADE, EUROPEAN BANKING

FEDERATION, THE FINANCIAL SERVICES FORUM,

THE FINANCIAL SERVICES ROUNDTABLE,

INSTITUTE OF INTERNATIONAL BANKERS,

SECURITIES INDUSTRY AND FINANCIAL MARKETS

ASSOCIATION, AND SWISS BANKERS

ASSOCIATION IN SUPPORT OF PETITIONERS

THOMAS C. RICE

Counsel of Record

MARY ELIZABETH MCGARRY

AGNES DUNOGUE

SIMPSON THACHER & BARTLETT LLP

425 Lexington Avenue

New York, New York 10017

(212) 455-2000

Counsel for Amici Curiae

TABLE OF CONTENTS

Page

INTEREST OF THE AMICI CURIAE.................... 1

SUMMARY OF THE ARGUMENT.......................... 3

Ft EE RE CR ay oe oO er 5

I. CERTIORARI SHOULD BE GRANTED

BECAUSE THE DECISION BELOW

THREATENS THE ABILITY OF

FINANCIAL INSTITUTIONS TO PLAY

THEIR VITAL ROLE IN

INTERNATIONAL ECONOMIC

DEVELOPMENT AND FOREIGN

pS) | SERRA es Oko op 5

A. The Importance of Financial

Institution Participation in World

I silat istic tiindiattsctiicttanivndinnien 5

B. The Importance of Financial

Institutions to Foreign Policy............. 8

C. The Threat Posed by This q

SN iit a kencacc kuttbaninssenninaaseecens 10

Il. THE DECISION BELOW IS

INCONSISTENT WITH SOSA AND

CERTIORARI SHOULD BE GRANTED

TO UNDO ITS UNWARRANTED

EXPANSION OF FEDERAL

GASES GET i piiriaiibertintstenneiconcctmeaing 13

The Financial Institution Activity

Complained of Is Not Actionable

Under Established International

The Second Circuit Erroneously

Created Civil Aiding and Abetting

Liability

The Second Circuit Ignored the

Guidance of Sosa in Deciding

Whether to Recognize the Private

Claims Asserted Here Against

Financial Institutions

3 Practical consequences

counsel against recognizing

claims such as plaintiffs

I i cic cons can 21

Case-specific deference

concerns counsel against

recognition of plaintiffs’

sisi loask cris sinccastsnccstcesennoin 25

CONCLUSION

APPENDIX

ill

TABLE OF CITED AUTHORITIES

Page(s)

CASES

Allen v. Wright, 468 U.S. 737 (1984).............c0s0008 23

Bell Atlantic Corp. v. Twombly, 127 S. Ct.

I I isk Scat tiiatescalntetesteccetessescvesnssvonnesénvnn 24

Biv. Union Carbide Chemicals and

Plastics Co., 984 F.2d 582 (2d Cir.

RESRRTRRUES Ea Sse 2 Ae at a 26

Central Bank of Denver, N.A. v. First

Interstate Bank of Denver, N.A., 511

ah es” RON ta Nee eS 19, 20, 24

Dura Pharmaceuticals, Inc. v. Broudo,

BRE RE | SESS MN ASN ee pan 23

Flores v. Southern Peru Copper Corp.,

EA Be Pe Fe Ci aes iccscacccesscecsgeacas 15

Hilton v. Guyot, 159 U.S. 113 (1895) ........eeeeeeeeeeee 26

Holmes v. Securities Investor Protection

Cl, TI OF, I Ce ohisessscansavsiccsseenencsadans 23

In re African-American Slave

Descendants Litigation, 471 F.3d 754

i a ciinanninstcbins 23

Jota v. Texaco, Inc., 157 F.3d 158 (2d Cir.

ARREARS TEAR Seoeeacpily UCN ONE ANID + Dee a ET 26

Luyan v. Defenders of Wildlife, 504 U.S.

I iin hic cacedeigsn suisse cteneisseialvercbseioietbakesoseauane 23

1V

TABLE OF CITED AUTHOnITIES—continued

Page(s)

Mastafa v. Australian Wheat Board Ltd.,

No. 07-CV-7955 (S.D.N.Y. filed Sept.

REESE REAR ROUSE oes a 12

Société Nationale Industrielle

Aérospatiale v. United States District

Court for Southern District of Jowa, 482

Pa a cicsbaanen 26

Sosa v. Alvarez-Machain, 542 U.S. 692

ERS SE SS MNG TESA este: CAINE Re RCC NE PE passim

Stoneridge Investment Partners, L.L.C. v.

Scientific-Atlanta, Inc., 128 S. Ct. 761

ch a 22, 24

United States v. Yousef 327 F.3d 56 (2d

ly ERE E Sg SE ears an emeen 17

STATUTES AND TREATIES

Alien Tort Statute, 28 U.S.C. § 1350...............0...... 2

Burmese Freedom and Democracy Act of

2003, Pub. L. No. 108-61, 117 Stat. 864

(2003) (codified at 50 U.S.C. § 1701

rs san dveasenant 8

Comprehensive Anti-Apartheid Act of

1986, 22 U.S.C. § 5001 note (1988)

(repealed 1993) ............... Noe REO ee ORO | 9

TABLE OF CITED AUTHORITIES—continued

Page(s)

North American Free Trade Agreement,

U.S.-Can.-Mex., Dec. 17, 1992, 32

ee cobsepsunnaanha 8

United States-Colombia Trade Promotion

Agreement, U.S.- Colom., Nov. 22, 2006

(congressional approval pending) ...................2++ 9

LEGISLATIVE AND EXECUTIVE MATERIALS

Executive Order No. 12532, 50 Fed. Reg.

Se I, TR UN ac ci ce inscednnnnens 9

National Security Council, National

Strategy for Combating Terrorism

Ce a cannaunaunniein 7

Office of Foreign Assets Control, United

States Department of the Treasury,

Foreign Assets Control Regulations for

the Financial Community (2008)...................00 8

State of the International Financial

System: Hearing Before the House

Commitee on Financial Services, 110th

Cong. 59 (statement of Henry M.

Paulson, Jr., U.S. Sec’y of the Treasury)

BO cs ives cuca cecthind cainecaicden th ried nacional tied all 6

vi

TABLE OF CITED AUTHORITIES—continued

United States Department of State,

Report to the Congress on

Industrialized Democracies’ Relations

with and Measures Against South

FS 5 REISER ARE SS ae

INTERNATIONAL MATERIALS

United States v. von Weizsaecker (The

Ministries Case), 14 Trials of War

Criminals Before the Nuernberg

Military Tribunals Under Control

Council Law No. 10 (William S. Hein &

iE csc ccueennes

MISCELLANEOUS

Lucien J. Dhooge, A Modest Proposa/ to

Amend the Alien Tort Statute to

Provide Guidance to Transnational

Corporations, 13 U.C. Davis J. Int’] L.

ere te ss.

Condoleezza Rice; United States

Secretary of State, Remarks at the

Business Council (May 9, 2007)..................

World Bank, Finance For Growth: Policy

Choices in a Volatile World (2001) ............

Page(s)

Pursuant to Rule 37.2 of the Rules of this

Court, The Clearing House Association L.L.C. (“The

Clearing House”), American Bankers Association,

Bankers’ Association for Finance and Trade,

European Banking Federation, The Financial

Services Forum, The _ Financial Services

Roundtable, Institute of International Bankers.

Securities Industry and Financial Markets

Association, and Swiss’ Bankers’ Association

(collectively, “amici, with the consent of all

parties, respectfully submit this brief amici curiae

in support of petitioners American Isuzu Motors,

Inc., et al!

INTEREST OF THE AMICT CURIAE

The Clearing House and the other amici are

domestic and foreign organizations concerned with

the commercial banking and financial services

industries and important public policy issues

1 Counsel for all parties received notice at least 10 days

prior to the due date of amici’s intention to file this brief.

The parties consented to the filing of this brief, and letters

reflecting such consent have been filed with the Clerk. No

counsel for any party authored this brief in whole or in

part, and no counsel or party made a monetary

contribution intended to fund the preparation or

submission of this brief. No person or entity other than

amici made a monetary contribution to the preparation or

submission of this brief.

affecting them.? There will be an enormous impact

on the business of their financial institution

members if a new, judicially created cause of action

for secondary liability in tort for a foreign nation’s

international law violations were to expose these

institutions to litigation in U.S. courts, and

potentially astronomical damage awards, for

engaging in their basic businesses of lending and

proving other ordinary financial services.

Amici respectfully submit that the petition for

certiorari should be granted because the Court of

Appeals for the Second Circuit has created great

uncertainty for financial institutions by

erroneously exercising jurisdiction under the Alien

Tort Statute (“ATS”), 28 U.S.C. § 1350, over civil

claims against private actors for allegedly aiding

and abetting international law violations, and by

providing conflicting guidance as to the standard

upon which lability may be imposed. The

continuation of this litigation will have a chilling

effect upon the business of amici ’s members —

business that is both critical to the economies of

to

The members of The Clearing House are ABN AMRO

Bank N.V., Bank of America, N.A., The Bank of New

York, Citibank, N.A., Deutsche Bank Trust Company

Americas, HSBC Bank USA, N.A., JPMorgan Chase

Bank, N.A., UBS AG, U.S. Bank, N.A., Wachovia Bank,

N.A., and Wells Fargo Bank, N.A. All amici are described

in the Appendix hereto. Certain members of these

organizations or their affihates are petitioners in this

matter.

_— — = | a

developing nations and an important component of

foreign policy.

SUMMARY OF THE ARGUMENT

International financial institutions play a vital

role in the economic growth and development of

developing nations and, in turn, to achieving

broader goals of social justice, peace and stability.

If the standard created by the Second Circuit as a

means of furnishing jurisdiction under the ATS

were permitted to stand, it would have a

substantial negative effect on this critical function

because financial institutions would curtail their

activities in developing nations.

The global financial services business of amuci’s

members, and the foreign trade and investment

that it finances, are also important tools in

international relations. These tools are blunted

when financial institutions are deterred by the

specter of potentially limitless tort lability even

though the political branches wish to further

foreign policy goals by encouraging participation in

the economy of a friendly nation that may have a

questionable human rights record. Moreover, U.S.

international relations are strained when judicial

expansion of private’ tort liability threatens the

financial institutions of our allies.

Plaintiffs would have the district court exercise

jurisdiction over an unprecedented private tort

claim against U.S. and _ non-U.S. financial

institutions for conduct that no international law

norm recognizes as actionable -— engaging in

financial transactions such as lending to another

nation and its citizens, consistent with the foreign

policies of those’ institutions’ respective

governments at the time. To do so, however, would

contravene- this Court’s direction in Sosa v.

Alvarez-Machain, 542 U.S. 692 (2004), that a claim

based on the present-day law of nations must rest

on an international norm both accepted by the

civilized world and defined with specificity, as well

as that decision’s guidance on the other factors to

be considered before exercising jurisdiction under

the ATS over a private civil tort arising from a

violation of international law.

The Second Circuit reversed the district court’s

order dismissing the complaints in these actions

although there is no precedent in international law

for imposing lability for the alleged conduct of the

financial institutions or, indeed, for recognizing

civil aiding and abetting liability for private actors

generally. Further, the majority did not properly

consider the significant collateral consequences,

including the foreign relations implications, of

recognizing such liability.

Finally, Sosa directed that, in assessing

particular claims, federal courts should consider

the “practical consequences” of providing a federal

forum for those claims, and whether case-specific

deference is appropriate. Sosa, 542 U.S. at 732-33.

Here, the practical consequences of extending the

scope of liability to the defendants for the conduct

alleged militate strongly against exercising ATS

jurisdiction over these claims. Moreover, and as

this Court suggested in Sosa in discussing these

very actions, case-specific deference is called for

due to the concerns raised by the governments of

the United States and South Africa. For all these

reasons, the decision of the Second Circuit was

erroneous and certiorari should be granted to

review it.

ARGUMENT

I. CERTIORARI SHOULD BE GRANTED

BECAUSE THE DECISION BELOW

THREATENS THE ABILITY OF FINANCIAL

INSTITUTIONS TO PLAY THEIR VITAL

ROLE IN INTERNATIONAL ECONOMIC

DEVELOPMENT AND FOREIGN RELATIONS

A. The Importance of Financial Institution

Participation in World Economies

Financial institutions, including amuci’s

members, are critical to the global economy, and

their participation in developing countries is vital

to the goals of economic development and growth.

As the U.S. Treasury Secretary recently observed,

“[flinancial services are particularly important for

developing countries because they are linked to

increased economic growth and development... .

Cross-country analysis shows that greater

tle

7 <; Mal

involvement by private and foreign banks leads to

more efficient lending and higher growth.”’

Developing nations’ economic development and

participation in the global economy in turn help

promote broader goals of social justice, stability,

and peace. The U.S. Department of State has

observed that, “[als more nations have integrated

into the global economy, ... the number of

democracies in our world has increased

dramatically — and with this advance of freedom

has come greater stability and security and peace.”4

By contrast, as stated by the National Security

Council, “[wleak states and failed ones are a source

3 State of the International Financial System: Hearing

Before the H. Comm. on Financial Services, 110th Cong.

59 (2007); see also World Bank, Finance For Growth:

Policy Choices in a Volatile World 4 (2001) (“Most

developing countries are too small to be able to afford to

do without the benefits of access to global finance,

including accessing financial services from foreign or

foreign-owned financial firms. Facilitating the entry of

reputable foreign financial firms to the local market

should be welcomed too: they bring competition, improve

efficiency, and lift the quality of the financial

infrastructure.”).

4 Condoleezza Rice, U.S. Sec’y of State, Remarks at the

Business Council (May 9, 2007), available at

http://www.state.gov/secretary/rm/2007/may/84575.htm

[hereinafter Sec’y of State Remarks].

of international ‘instability[;] lolften, these states

may become a sanctuary for terrorism.”5

Progress toward these goals will be undermined

if financial institutions are fearful that by engaging

in business in developing nations, many of which

have imperfect human rights records, they may

later be held liable for abuses by those nations’

governments.

The importance of the participation of

international financial institutions in developing

countries is forcefully demonstrated by the United

States and South African governments’ statements

regarding the continuation of this litigation. In the

Statement of Interest of the United States lodged

with the district court, the Legal Adviser to the

Department of State expressed concern that

adjudication of these cases “may deter foreign

investment where it is most needed.” Petitioners’

Appendix (“App.”) 245a. The Republic of South

Africa opposes continuation of this litigation in part

because it interferes with that government’s effort

to create an environment conducive to foreign

private-sector investment, which it believes is

important to “faster economic growth offerling] the

only way out of poverty, inequality, and

unemployment.” App. 305a.

5 Nat'l Sec. Council, National Strategy for Combating

Terrorism 23 (2003), available at

http://www.whitchouse.gov/news/releases/2003/02/counter

_terrorism/ counter_terrorism_strategy.pdf.

B. The Importance of Financial Institutions

to Foreign Policy

Economic engagement and economic sanctions

are, respectively, carrots and sticks of U.S. foreign

policy. See, e.g., Sec’y of State Remarks, supra n.4

(“[flree trade is a critical tool” in the effort to “foster

peace and stability between states” by “promotling]

prosperity, good governance, and social justice

within states”); Office of Foreign Assets Control,

U.S. Dep’t of the Treasury, Foreign Assets Control

Regulations for the Financial Community 2 (2008)

(“Economic sanctions are powerful foreign policy

tools.”).6

For example, the U.S. Department of the

Treasurys Office of Foreign Assets Control

administers and enforces laws and regulations that

impose economic and trade sanctions against

countries that are targeted based on various U.S.

foreign policy goals, which include curtailing

foreign human right violations. See, e.g., Burmese

Freedom and Democracy Act of 2003, Pub. L. No.

108-61, 117 Stat. 864 (2003) (codified at 50 U.S.C. §

1701 note). As to other countries, the United

States encourages financial sector involvement,

including through treaties and free’ trade

agreements. See, e.g, North American Free Trade

Agreement ch. 14, U.S.-Can.-Mex., Dec. 17, 1992,

32 I.L.M. 289 & 605; United States-Colombia Trade

6 Available at http://www.ustreas.gov/offices/

enforcement/ofac/regulations/facbk.pdf.

Promotion Agreement ch.12, U.S.- Colom., Nov. 22,

2006 (congressional approval pending), available at

http://www.ustr.gov/Trade_Agreements/Bilateral/

Colombia_FTA/Final_Text/ Section_Index.html.

The history of international dealings with

South Africa during the apartheid era illustrates

that economic engagement and sanctions are

expressions of foreign policy. The regulation of

financial institutions’ and other entities’ business

in that country was a central part of the foreign

policy of the United States, as well as other

western nations. By Executive Order in 1985,

followed by the Comprehensive Anti-Apartheid Act

of 1986 (“CAAA”), the United States placed some

restrictions on financing and trade, but did not

mandate divestment or place a blanket ban on

engaging in business in South Africa. See Exec.

Order No. 12,532, 50 Fed. Reg. 36,861 (Sept. 9,

1985); 22 U.S.C. § 5001 note (1988) (repealed 1993).

The United States believed its constructive

engagement policy of economic incentives and

sanctions would promote the end of apartheid. See,

e.g., 22 U.S.C. § 5002 (the purpose of the CAAA

was “to guide the efforts of the United States in

helping to bring an end to apartheid in South

Africa”).

Other countries in which foreign financial

institutions involved in this litigation are based

(including the United Kingdom, France, Germany,

and Switzerland) also pursued policies. of

constructive engagement, restricting but not

10

prohibiting business dealings with South Africa,

primarily as of the mid-1980s. See U.S. Dep’t of

State, Report to the Congress on Industrialized

Democracies’ Relations with and Measures Against

South Africa 1-2, 17-21, 46-48, 50-52 (1987).

C. The Threat Posed by This Litigation

Plaintiffs have brought these actions seeking

redress for the tens of millions of South Africans

who were injured by South Africa’s former

apartheid regime. They have sued over 50 U.S. and

foreign corporations, including more than a dozen

financial institutions, on the theory that by doing

business in or with South Africa these companies

aided and abetted the regime’s violations of

international law. App. 82a (Korman, J.). In short,

plaintiffs disagree with the policy of constructive

engagement,.and seek to have private entities that

acted in accordance with that policy held liable, in

tort, under the ATS.

Specifically as to the financial institution

defendants, plaintiffs allege that these corporations

extended loans and other financing to the

government of South Africa and South African

entities, and that such transactions helped “insure

that [the apartheid] system could function.” App.

83a (Korman, J.) (quoting complaint). They do not

allege that these defendants acted with the intent

of furthering the apartheid regime's international

law violations. App. 137a (Korman, J.). They do

not link the injuries of any particular individual to

11

the conduct of any particular defendant, nor do

they intend to attempt to do so. App. 84a-85a

' (Korman, J.). Rather, they broadly assert that

“any transfer of capital” to South Africa aided and

abetted apartheid: “loans to the railways and

harbors systems assisted in the mobilization of the

armed forces; trade financing provided the

computers and _ telecommunications equipment

necessary to the efficient functioning of a modern

army; land] financing for housing project

perpetuated the segregated housing of apartheid.”

App. 83a-84a (Korman, J.) (quoting complaint).

These claims, based on a highly speculative and

attenuated theory of causation, threaten

international financial institutions with virtually

limitless liability for having engaged in normal

business activities that were fully consistent with

their home nations’ foreign policies at the time.

Imposing liability upon financial institutions

and other entities for the conduct alleged in these

actions would constitute judicial second-guessing of

our political branches’ foreign relations policy of

constructive engagement and thus raise serious

separation of powers concerns. In addition, the

existence of this litigation already has strained

relations with U.S. allies who have expressed

“profound concern” to the U.S. Department of State

that their banks and corporations are named as

defendants in these actions. App. 245a.

Moreover, the Second Circuit’s recognition of

liability for doing business with and in a nation

12

that has engaged in international law violations

also threatens the ability of financial institutions to

play their vital and salutary role in global economy

and foreign relations. See Lucien J. Dhooge, A

Modest Proposal to Amend the Alien Tort Statute

to Provide Guidance to Transnational Corporations,

13 U.C. Davis J. Int'l L. & Pol’y 119, 134 (2007)

(recognizing ATS liability for foreign state violation

of international law “greatly increases the risk

associated with foreign investment activities,”

which “could serve to significantly curtail future

foreign investments as well as commercial

activity”). As Judge Korman recognized, the

majoritys “newly minted theory of aiding-and-

abetting liability” generates “tremendous

uncertainty for private corporations . . . . This

uncertainty, in turn, will undermine efforts by the

United States to encourage reform in _ these

countries through active economic engagement.”

App. 163a-164a (citation omitted).

Plaintiffs seek numerous forms of equitable,

compensatory, and punitive relief, including $400

billion in damages, and the cost of defending this

litigation alone is daunting. Further, the claims

here are not unlike those of other ATS actions that

similarly would make financial institutions that

engaged in normal banking transactions liable to

vast numbers of individuals injured by a foreign

government. See. e.g., Mastafa v. Aust]. Wheat Bd.

Ltd., No. 07-CV-7955 (S.D.N.Y. filed Sept. 11, 2007)

(action on behalf of all victims of torture, murder,

and other crimes by Saddam Hussein’s regime from

13

1996 through March 2003, alleging French bank

maintained a United Nations escrow account from

which funds were disbursed to the regime). In the

wake of the Second Circuit's decision, financial

institutions will inevitably be exposed to additional

costly suits seeking many hundreds of billions of

dollars in damages.

The prospect of further litigation can be

expected, at a minimum, to raise the cost of doing

business internationally, as well as to cause

financial institutions to curb their activities in

foreign nations with problematic human rights

histories. Indeed; the very pendency of these

actions threatens to impede the Executive and

Legislative branches’ ability to encourage economic

activity that may be an important component of

U.S. relations with a friendly nation. See US.

Statement of Interest (to the extent this litigation

deters foreign investment in the developing world,

“it will compromise a valuable foreign policy tool”).

App. 246a.. For these reasons, certiorari should be

granted to review the Second Circuit's decision to

greatly expand the potential liability of institutions

operating internationally.

Il. THE DECISION BELOW iS INCONSISTENT

WITH SOSA AND CERTIORARI SHOULD BE

GRANTED TO UNDO ITS UNWARRANTED

EXPANSION OF FEDERAL JURISDICTION

This Court held in Sosa that jurisdiction under

the ATS depends on the recognition of a private

14

tort claim for violation of an international law

norm, and directed that federal courts should not

recognize a claim if the norm has “less definite

content and acceptance among civilized nations

than the historical paradigms familiar when § 1350

was enacted.” 542 U.S. at 732. The Court exhorted

the lower courts to practice “vigilant doorkeeping”

in determining whether to recognize a civil tort for

violation of international norms, 542 U.S. at 729,

and set forth a series of reasons for exercising

“great caution in adapting the law of nations to

private rights,” zd. at 728. Among those reasons is

that there may be “collateral consequences [tol

making international rules privately actionable,”

including consequences that may implicate foreign

relations. Jd. at 727. As discussed above, the

imposition of liability for engaging in customary

financial transactions with or in another nation

would have tremendous collateral consequences,

chilling the cross-border investment that is critical

to developing nations and an integral component of

U.S. foreign policy.

Sosa also instructed that in assessing a

plaintiffs particular claims, courts must exercise

judgment about the “practical consequences” of

making them available to litigants in the federal

courts, and, where appropriate, practice “case-

specific deference” in limiting ATS jurisdiction. 542

U.S. at 732-33 & n.21 (specifically noting that this

litigation presented “a strong argument” for such

case-specific deference).

ere:

15

Disregarding these clear instructions, the

Second Circuit opened the door to private tort

claims that have no basis in international law,

greatly expanding the scope of potential liability for

financial institutions without regard to the

consequences of doing so, and remanded the matter

for further proceedings although case-specific

deference was called for in the jurisdictional

analysis.

A. The Financial Institution Activity

Complained of Is Not Actionable Under

Established International Law

The complaints in these actions were properly

dismissed by the district court because there is no

precedent in international law for imposing liability

upon a private entity for doing business in or with

a country that commits. international law

violations. None of the purported international law

sources relied upon by plaintiffs or the Second

Circuit majority recognizes such conduct as

actionable.

To the contrary, the most factually similar

authority cited by plaintiffs and the Second Circuit,

decisions from the Nuremberg tribunals, supports

the proposition that engaging in the financing

activities alleged here does not _ violate

international law. Although the Nuremberg

decisions are not competent sources of customary

international law, see Flores v. S. Peru Copper

Corp., 414 F.3d 233, 250-52, 263-64 (2d Cir. 2003),

16

one such decision, addressing charges brought

against a bank executive for lending money to

“various SS enterprises,” is instructive. The

tribunal specifically held:

Loans or sale of commodities to be

used in an unlawful enterprise ...

can hardly be said to be a crime.

Our duty is to try and punish those

guilty of violating international law,

and we are not prepared to state

that such loans_ constitute a

violation of that law....

United States v. von Weizséecker (“The Ministries

Case”), 14 Trials of War Criminals Before the

Nuernberg Military Tribunals Under Contro]

Council Law No. 10 308, 622 (William S. Hein &

Co., Inc. 1997) (1949). As noted by Judge Korman,

this decision underscores that there is no norm of

international law establishing liability as to private

actors for engaging in business’ with—and

particularly, by providing financing to—States that

violate international law. App. 79a-80a.

Expanding concepts of international law

lability to normal lending and business activities

would be particularly inappropriate in the context

of this litigation given the constructive engagement

policies of the United States and other western

countries toward business with South Africa,

discussed above. A principle in conflict with the

practices of. civilized nations cannot qualify as a

customary international law principle, United

17

States v. Yousef, 327 F.3d 56, 92 n.25 (2d Cir.

2003), let alone one that has as “definite [a] content

and acceptance among civilized nations [as] the

historical paradigms familiar when [the ATS] was

enacted,” Sosa, 542 U.S. at 732.7 The theory that

financial institutions and other entities committed

violations of international law by engaging in

business activities that were permitted by the laws

of their States of incorporation at the time, both

raises concerns of retroactive application of a new

standard of liability to conduct that was

undertaken decades earlier, and ignores the

Of course, engaging in customary banking-related

activities is nothing like the historical paradigms for

actionable international law violations, specifically

offenses such as physical assaults against ambassadors,

violations of safe conduct, and prize captures and piracy.

That fact alone should have warranted greater caution in

recognizing a private civil action here. The allegation

that by engaging in financing activities the financial

institutions aided and abetted South Africa's

international law violations is also completely unlike the

matters addressed in the authorities relied on by Judge

Hall (involving direct participation by American citizens

in hostile acts at sea or against a foreign settlement) as

support for the notion that “the Founding Generation .. .

understood the ATCA encompassed aiding and abetting

liability,” App. 70a n.5; as correctly pointed out by Judge

Korman, these authorities do not support the broad

proposition advanced by Judge Hall, App. 159a-163a.

8 For ATS jurisdiction, the international law norm alleged

to be violated must have had the requisite level of

acceptance and specificity at the time of the conduct at

issue. See App. 152a-154a (Korman, J.) (noting that

18

domestic laws of civilized nations as a fundamental

source of international law. See, e.g., Sosa, 542 U.S.

at 734 (recognizing the “customs and usages of

civilized nations” as a source of international law)

(internal quotation marks omitted).

B. The Second Circuit Erroneously Created

Civil Aiding and Abetting Liability

Each member of the Second Circuit panel

interpreted Sosa differently, resulting in three

individual opinions as well as a per curiam opinion,

and sowing considerable confusion. Judge Korman,

dissenting, correctly found that there were no well-

established and universally recognized norms in

effect at the time of the conduct alleged that would

hold private individuals or corporations liable for

aiding and abetting the government crimes

underlying these actions, and therefore would have

upheld the dismissal of the complaints. App. 122a-

180a. Two members of the panel voted to reverse

the order of dismissal, however, erroneously finding

ATS jurisdiction over aiding and abetting claims.

Judges Katzmann and Hall disagreed with each

other over the basis on which to recognize civil

aiding and abetting liability as well as the standard

for imposing it, inadvertently but clearly

illustrating the lack of consensus and specificity

domestic and international law both prohibit retroactive

application of legislation).

19

required under Sosa before an international law

norm may provide a basis for ATS jurisdiction.

Judge Katzman: agreed with Judge Korman

that international law must govern not only what

constitutes an international law violation but also

the scope of liability for such a violation. But

unlike Judge Korman, Judge Katzmann relied

upon international crimina/ law to determine

whether there is ATS jurisdiction over civi/ claims.

App. 32a-48a. International criminal law does not

provide a basis for finding an_ established

international law norm for civil aiding and abetting

liability as to private actors, however. In Centra/

Bank of Denver, N.A. v. First Interstate Bank of

Denver. N.A., this Court refused to make a similar

leap, stating that although there is criminal

liability for aiding and abetting criminal violation

of Section 10(b) of the Securities Exchange Act of

1934, “it does not follow that a private civil aiding

an’? abetting cause of action must also exist,” and

declining to find one. 511 U.S. 164, 190-91 (1994).

Further, Sosa’s . requirement that an

international norm be defined with specificity was

not satisfied by this approach because, as Judge

Katzmann acknowledged, there is a lack of

consensus as to the mens rea requirement for

aiding and abetting liability in the criminal law

sources upon which he relied. App. 43a-48a. Judge

Katzmann adopted a test that would impose

liability where the defendant provided “practical

assistance’ to the primary violator that had a

20

“substantial effect,” and did so “with the purpose of

facilitating the commission of thle] crime.” App.

47a.

Judge Hall, in contrast, considered

international law relevant solely for determining

whether the alleged conduct of the primary actor

constituted a violation, deeming it irrelevant

whether international law recognizes aiding and

abetting liability. This approach is directly

contrary to the statement in Sosa that courts must

consider “whether international law extends the

scope of liability .. . to the perpetrator being sued .

.. such as a corporation or individual.” 542 U.S. at

732 n.20. Despite this Court’s admonitions in Sosa

against creating new private rights of action, id. at

725-28, Judge Hall created a new law of civil aiding

and abetting liability in ATS cases. He claimed to

be applying the “standard articulated by the federal

common law.” App. 68a. This Court has recognized,

however, that the concept of aiding and abetting

the tortious conduct of another “has been at best

uncertain in application.” Centra/ Bank, 511 US.

at 181.

Judge Hall would set a far lower bar for

imposing liability than Judge Katzmann. Under

this test, a defendant need not have acted with the

purpose of facilitating an international law

violation; “knowingly and substantially assisting”

the principal tortfeasor, “encouraging, advising,

contracting with, or otherwise soliciting” with

actual or constructive knowledge of the principal's

21

violation, or providing the “tools, instrumentalities,

or services’ to commit the violations with active or

constructive knowledge, would suffice. App. 7la.

This broad definition could be read to render a

party liable for making a loan to a borrower that it

did not know, but allegedly should have known,

was engaged in wrongdoing, a result that would

constitute a substantial expansion of international

law.

C. The Second Circuit Ignored the

Guidance of Sosa in Deciding Whether to

Recognize the Private Claims Asserted

Here Against Financial Institutions

1. Practical consequences counsel

against recognizing claims such as

plaintiffs assert here.

In requiring courts to evaluate the “practical

consequences’ of recognizing a plaintiffs claims in

an ATS action, this Court noted the relevance of

whether international law extends the scope of

liability for the given international law violation to

the particular type of actor being sued. Sosa, 542

U.S. at 732 n.20. Here, recognizing plaintiffs’

claims against financial institutions for engaging in

their customary business would have practical

consequences that counsel against exercising ATS

jurisdiction.

This Court recently had occasion to evaluate

the “practical consequences of an expansion lof

22

liability)!” in Stoneridge Investment Partners,

LL.C. v. Scientific-Atlanta, Inc., 128 S. Ct. 761

(2008), in which it affirmed that the private right of

action under Section 10(b) should not be extended

to so-called “scheme liability.” The Court noted

that lawsuits such as the one before it that involve

“extensive dis overy and the _ potential for

uncertainty and disruption .. . allow plaintiffs with

weak claims to extort settlements from innocent

companies, and was reluctant to “expose a new

class of defendants to these risks.” /d. at 765. The

“practical consequences” might involve raising the

cost of doing business, and deterring overseas firms

from doing business in the United States. Jd. at

764-65.

The parallels between Stoneridge and these

actions extend well beyond the fact that both cases

involve federal statutes onto which plaintiffs would

engraft expansive theories of liability without a

congressional mandate to do so. See Sosa, 542 U.S.

at 726 (“the general practice has been to look for

legislative guidance before exercising innovative

authority over substantive law”). These actions

also squarely present the concern expressed by the

Court in Stoneridge with recognizing a private civil

claim where the defendants’ conduct is “too remote”

from the plaintiffs’ injury. Stoneridge, 128 8, Ct. at

769-70. Allegations that, but for the defendants’

“involvement” in South Africa, apartheid “would

have ended in 1985.” or “would not have occurred in

the same way,” and therefore plaintiffs would not

have been injured or would not have been injured

23

in the same way, would unmoor liability from any

reasonable concept of causation. See, e.g., Holmes

v. Sec. Investor Protection Corp., 503 U.S. 258, 268

(1992) (requiring in RICO context a “direct relation

between the injury asserted and the injurious

conduct alleged”); cf Dura Pharm., Inc. v. Broudo,

544 U.S. 336, 346 (2005) (requiring in securities

context that “defendant’s lalleged conduct]

proximately caused the plaintiffs economic loss”). ®

Additionally, to describe as “extensive” the

discovery that would be required should this

litigation continue would be a gross

understatement. These actions are brought against

scores of defendants located both in and outside of

the United States, on behalf of millions of people

for whose individual injuries redress is sought,

9 In an action by the descendants of slaves allegedly injured

because, had defendants not “dolne] business with

slaveowners, there would have been less slavery,” the

Court of Appeals for the Seventh Circuit held those

plaintiffs lacked standing, stating “this causal chain is too

long and has too many weak links for a court. to be able to

find the defendants’ conduct harmed the plaintiffs at all,

let alone in an amount that could be estimated without

the wildest speculation.” Jn re African-American Slave

Descendants Litig., 471 F.3d 754, 759 (7th Cir. 2006). See

also Lujan v. Defenders of Wildlife, 504 U.S. 555, 560

(1992) (standing requires “a causal connection between

the injury and the conduct complained of”); Allen v.

Wright, 468 U.S. 737, 759 (1984) (“The links in the chain

of causation between the challenged . . . conduct and the

asserted injury are far too weak for the chain as a whole

to sustain respondents’ standing.”).

“a

24

cover a span of 45 years, and center on activity

undertaken in a foreign country, primarily by its

former governing regime. Judge Korman noted

the absence of any “reasonable expectation that

discovery will reveal evidence’ to support [the

allegations of plaintiffs’ complaints],” even if those

pleadings are amended yet again. App. 85a

(quoting Bel/ Atl Corp. v. Twombly, 127 S. Ct.

1955, 1965 (2007)). If these actions are allowed to

proceed, discovery will by any measure

undoubtedly be extensive.

This litigation also raises concern, expressed in

Stoneridge, over “extortled] settlements.” As Judge

Korman observed, recognizing federal jurisdiction

in these cases “would simply provide a vehicle to

coerce a settlement.” App. 85a; see also Central

Bank, 511 U.S. at 189 (due to the uncertainty of

rules governing aiding and abetting liability,

entities “may find it prudent and necessary, as a

business judgment, to abandon substantial

defenses and to pay settlements in order to avoid

the expense and risk of going to trial”). That

plaintiffs here seek, among other forms of relief,

more than $400 billion in damages substantiates

Judge Korman’s observation. The cost of defending

these and similar ATS actions alone would be so

staggering that further litigation can be expected to

raise the cost of doing business and potentially

decrease foreign firms’ interest in the U.S. market.

Finally, and as noted above, permitting the

continued prosecution of this litigation would

25

inevitably increase the number of massive and

unmanageable cases brought under the ATS on

similarly attenuated theories.

2. Case-specific deference concerns

counsel against recognition of

plaintiffs’ claims.

It was improper for the Second Circuit majority

to refuse to consider case-specific prudential

concerns because this Court has identified such

concerns as among the “principlels] limiting the

availability of relief in federal courts” under the

ATS for violations of customary international law.

Sosa, 542 U.S. at 733 n.21. Thus, considering these

limitations does not, as the Second Circuit majority

contended, improperly conflate the jurisdictional

analysis with the cause of action analysis; rather,

such an examination is part of courts’ jurisdictional

analysis whether to allow a private right of action

to proceed, as correctly noted by Judge Korman.

See App. 116a-119a. Consideration of the case-

specific concerns at issue here, deference to the

political branches and comity, demonstrates that

these concerns mandate dismissal of this litigation.

First, in referring to “case-specific deference to

the political branches,” this Court in Sosa

specifically pointed to these very cases, noting that

“{iln such cases, there is a strong argument that

federal courts should give serious weight to the

Executive Branch’s view of the case’s impact on

foreign policy.” Sosa, 542 U.S. at 733 n.21. The

26

Statement of Interest of the United States indicates

that this lawsuit, and others of its type, will cause

significant foreign relations problems, both with

the countries with which the United States is

trying to engage, and with allies whose financial

institutions are being subjected to U.S. courts’

evaluation of conduct that they engaged in

consistently with their own countries’ policies.

App. 244a-246a.

Second, comity concerns counsel that, because

this litigation “touchles] the laws and interests of

other sovereign’ states,” Société Nationale

Industrielle Aérospatiale v. U.S. Dist. Court for S.

Dist. of Iowa, 482 U.S. 522, 543 n.27 (1987),

“recognition” should be given to “the legislative,

executive or judicial acts” of post-apartheid South

Africa, Hilton v. Guyot, 159 U.S. 113, 164 (1895).

U.S. courts should “defer to the judgment of a

democratic foreign government” regarding how

“disputes arising from a mass tort occurring within

its borders can be best resolved,” to avoid

disrupting relations with that government and

frustrating its efforts in setting up “what it believes

to be the most effective method of dealing with a

difficult problem.” #1 v. Union Carbide Chem. &

Plastics Co., 984 F.2d 582, 583, 586 (2d Cir. 1993)

(affirming dismissal of claims where Indian

government determined interests of Indian mass

tort victims would be best served if it exclusively

represented victims in all litigation and funded a

plan to process all their claims): see also Jota v.

Texaco, Inc. 157 F.3d 153, 160 (2d Cir. 1998)

27

(deference should also be given “to the official

position of a foreign state . . . on matters concerning

actions of the foreign state taken within or with

respect to its own territory”).

Here, deference should be accorded to the

South African government’s prerogative to address

matters relating to its nation, through policies and

programs it has established to compensate the

victims of apartheid and redress its effects—

particularly in light of that government’s

repeatedly expressed view that this litigation is an

affront to its sovereignty, a violation of its public

policy of reconciliation, and a threat to its attempts

to attract foreign investment as part of an effort to

alleviate the very injuries alleged by plaintiffs.

App. 290a-292a, 296a-300a, 304a-313a, 316a.

28

CONCLUSION

For the reasons stated above, the petition for a

writ of certiorari should be granted.

Respectfully submitted,

THOMAS C. RICE

Counsel of Record

MARY ELIZABETH MCGARRY

AGNES DUNOGUE

SIMPSON THACHER & BARTLETT LLP

425 Lexington Avenue

New York, NY 10017

(212) 455-2000

Counsel for Amici Curiae

February 11, 2008

APPENDIX

la

APPENDIX

DESCRIPTIONS OF AMICI CURIAE

The Clearing House Association L.L.C. is an

association of leading commercial banks dedicated

to promoting the interests of its members and the

commercial banking industry. It often presents the

views of its members on important public policy

issues that affect the commercial banking industry

by, among other things, appearing as amicus curiae

in this Court.

American Bankers Association (“ABA”) is the

principal national trade association of the financial

services industry in the United States. Its

members, located in each of the fifty States and the

District of Columbia, include financial institutions

of all sizes and types, both federally and state-

chartered. ABA members hold a majority of the

domestic assets of the banking industry in the

United States.

Bankers’ Association for Finance and Trade

has 150 members, including U.S. and non-U:.S.

banks, entities that provide services to such banks,

and non-U.S. bank trade associations. It provides

an educational and networking platform for its

members and is a catalyst in the development of

solutions in international banking legislation and

regulation.

Za

European Banking Federation is the voice of

the European banking sector, representing the

interests of some 5000 European banks. It

represents, defends, and promotes the interests of

its members and promotes the development of the

industry.

The Financial Services Forum is a non

partisan financial and economic policy organization

comprised of the chief executive officers of 21 of the

largest and most diversified financial institutions

with business operations in the United States. It

works to promote policies that enhance savings and

investment in the United States and that ensure an

open, competitive, and sound global financial

services marketplace.

The Financial Services Roundtable is a

national association the membership of which

includes 100 of the largest integrated financial

services companies providing banking, insurance,

and investment products and services to the

American consumer.

3a

Institute of International Bankers is an

association of over 90 financial institutions

headquartered in 35 countries that conduct

banking, securities, and/or insurance operations in

the United States. It is devoted to representing

and advancing the interests of international banks

in the United States to ensure that they receive the

same competitive opportunities as domestic

banking organizations and that their global

operations are not subject to unjustified

extraterritorial application of U.S. laws.

Securities Industry and Financial Markets

Association (“SIFMA”) brings together the shared

interests of more than 650 securities firms, banks

and asset managers. SIFMA’s mission is to

promote policies and practices that work to expand

and perfect markets, foster the development of new

products and services and create efficiencies for

member firms, while preserving and enhancing the

public's trust and confidence in the markets and

the industry. SIFMA works to represent its

members' interests locally and globally. It has

offices in New York, Washington D.C., and London

and its associated firm, the Asia Securities

Industry and Financial Markets Association, is

based in Hong Kong.

Swiss Bankers Association is the leading

professional organization of the Swiss financial

center, the members of which include banks and

other financial institutions. Its main purpose is to

maintain and promote the best possible framework

conditions for the Swiss financial center, both at

home and abroad.

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