The Second Circuit Court of Appeals recently ruled that a lawsuit brought by victims of genocide in Sudan against French mega-bank BNP Paribas can proceed. The suit exemplifies the potential of the law of the 50 states to provide justice for human rights violations given that the U.S. Supreme Court has limited the reach of the Alien Tort Statute.
The named plaintiffs, who reside in the United States, sued on behalf of a class of similarly situated victims (the second amended complaint is here; other pleadings are here). All of the victims allege that they were tortured, detained, raped, displaced, and/or had loved ones murdered by militia forces who were armed and dispatched using resources made available by virtue of BNP Paribas’ violation of U.S. sanctions. Although the conduct alleged clearly violates international law, all the causes of action were framed in terms of New York tort law (e.g., negligence, intentional infliction of emotional distress, battery, false arrest, conversion, and wrongful death). Plaintiffs contend that the bank is either directly liable for these acts (e.g., negligence) or indirectly liable for the conduct of Sudanese forces under theories of conspiracy and aiding/abetting.
Originally, on defendant’s motion, the district court had dismissed the suit on the basis of the act of state doctrine and the expiration of the statute of limitations. The act of state ruling turned on the district court’s determination that the suit required it to declare upon the legality and validity of an “official act” of a foreign sovereign. The court also applied New York’s one-year statute of limitation for intentional torts and found the claims to be untimely.
In its recent opinion, the 2nd Circuit unanimously reversed. On the act-of-state defense, the three-judge panel reasoned that the act of state doctrine cannot shield a defendant’s conduct from scrutiny when the state’s own laws and “a universal international consensus” prohibit the acts in question. Indeed, defendants were unable to point to a statute, decree, or comparable sovereign authorization of the impugned conduct. In other words, genocide and crimes against humanity cannot, as a matter of law, be “official acts” of Sudan. The Second Circuit reiterated the Supreme Court’s admonition that the act of state doctrine is not a “categorical rule of abstention that prohibits courts from deciding cases or controversies whenever issues of foreign relations arise.” In addition, the Second Circuit confirmed that U.S. courts are prohibited from deeming violations of jus cogens norms—which include the prohibitions against genocide, mass rape, and ethnic cleansing—to be valid acts of a foreign sovereign.
Turning to the statute of limitations, the Second Circuit determined that the district court had applied the wrong provision of New York’s civil code. Because the underlying acts were the subject of a criminal action against the same defendant and involving the same event or transaction brought by the U.S. Justice Department (more on this below), plaintiffs have one year from the termination of the criminal action to commence a civil suit (see C.P.L.R. §215(8)(a)). Under this standard, the plaintiffs’ complaint was timely.
The criminal action in question has its origins in U.S. human rights and counter-terrorism sanctions against Sudan and the determination by the U.S. government that a genocide was underway in Darfur. In an earlier criminal suit settled in 2014, the French bank admitted to evading those sanctions and providing Sudanese banks with access to the U.S. financial system, all with the knowledge that the regime of (recently deposed) Omar al-Bashir was a sponsor of terrorism and was committing genocide and crimes against humanity against his own people. (The charging document (a criminal information) filed against the bank is available here on p 12).
According to the stipulated statement of facts (here, p. 20), the bank set up a remarkably convoluted set of arrangements with satellite banks and others to evade sanctions, disguise its transactions with sanctioned entities, and cover its tracks. According to U.S. authorities Paribas was essentially acting as “the central bank for the government of Sudan.”
Paribas’ decision to continue to do business with a genocidal regime has been a costly one. The 2014 criminal suit—which also involved the bank’s violations of Iranian and Cuban sanctions regimes—resulted in close to $9 billion in fines and forfeiture penalties, the largest financial penalty ever awarded. Some of those funds, which include the proceeds of criminal activity, were supposed to go to people harmed in the sanctioned countries. However, it appears that the compensation fund was never created.
BNP Paribas was also sued under the U.S. Anti-Terrorism Act (ATA) by victims of the U.S. embassy bombings in August 1998 in Kenya and Tanzania. That case was dismissed on appeal when the D.C. Circuit ruled that the bank’s transactions in Sudan did not proximately cause the plaintiffs’ harms (most of the stipulated transactions post-dated the embassy bombings) and that the operative version of the ATA did not support aiding and abetting liability. (With the 2016 passage of the Justice Against Sponsors of Terrorism Act (JASTA), Congress amended the ATA to allow claims of aiding and abetting and conspiracy).
In Jesner v. Arab Bank PLC, the Supreme Court limited the ability of human rights victims to sue foreign corporations for violations of international law in U.S. federal courts under the Alien Tort Statute (ATS). The opinion left open the possibility of suiting U.S. corporations under the ATS, and several such suits are proceeding, including one against defense contractor CACI for its role in the U.S. torture program. The BNP Paribas suit offers a creative workaround by focusing on ordinary state tort law rather than relying upon the ATS to provide federal jurisdiction. (The BNP Paribas suit is in federal court on the basis of diversity jurisdiction because the parties hail from different states and are foreign entities). The suit was brought by, among others, Lee Crawford-Boyd (formerly of Pepperdine Law School, now a partner with McKool Smith). The suit enabled Crawford-Boyd to demonstrate the viability of a legal strategy she has long advocated: that human rights advocates should utilize U.S. state courts for their claims rather than rely upon the ATS. California is particularly hospitable, given 2015 legislation enabling civil suits for human rights abuses.