No. 07-919 [ ~LED

IN THE ~t OFFICE OF ]’HE CLERK

ourt of t[F L.~[~~_~.~,~ i..SL[PRE-A~. COURT, U.S.

AMERICAN ISUZU MOTORS INC., BANK OF AMERICA, N.A.,BARCLAYS BANK PLC, BRISTOL-MYERS SQUIBB COMPANY,

BP P.L.C., CHEVRONTEXACO CORPORATION, ETAL.,

Petitioners,

LUNGISILE NTSEBEZA, HERMINA DIGWAMAJE,

KHULUMANI SUPPORT GROUP, ET AL.,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATESCOURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF AMICI CURIAE OF THE CLEARING HOUSEASSOCIATION L.L.C., AMERICAN BANKERS

ASSOCIATION, BANKERS’ ASSOCIATION FORFINANCE AND TRADE, EUROPEAN BANKING

FEDERATION, THE FINANCIAL SERVICES FORUM,THE FINANCIAL SERVICES ROUNDTABLE,INSTITUTE OF INTERNATIONAL BANKERS,

SECURITIES INDUSTRY AND FINANCIAL MARKETSASSOCIATION, AND SWISS BANKERS

ASSOCIATION IN SUPPORT OF PETITIONERS

THOMAS C. RICECounsel of Record

MARY ELIZABETH MCGARRYAGNI~S DUNOGUI~,SIMPSON THACHER ~ BARTLETT LLP425 Lexington AvenueNew York, New York 10017(212) 455-2000Counsel for Amici Curiae

TABLE OF CONTENTS

Page

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

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

ARGUMENT ............................................................5

I. CERTIORARI SHOULD BE GRANTEDBECAUSE THE DECISION BELOWTHREATENS THE ABILITY OFFINANCIAL INSTITUTIONS TO PLAYTHEIR VITAL ROLE ININTERNATIONAL ECONOMICDEVELOPMENT AND FOREIGNRELATIONS ..................................................5

A. The Importance of FinancialInstitution Participation in WorldEconomies ...........................................5

B. The Importance of FinancialInstitutions to Foreign Policy .............8

C. The Threat Posed by ThisLitigation ..........................................10

II. THE DECISION BELOW ISINCONSISTENT WITH SOSA ANDCERTIORARI SHOULD BE GRANTEDTO UNDO ITS UNWARRANTEDEXPANSION OF FEDERALJURISDICTION ..........................................13

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A. The Financial Institution ActivityComplained of Is Not ActionableUnder Established InternationalLaw ....................................................15

B. The Second Circuit ErroneouslyCreated Civil Aiding and AbettingLiability .............................................18

C. The Second Circuit Ignored theGuidance of Soss in DecidingWhether to Recognize the PrivateClaims Asserted Here AgainstFinancial Institutions .......................21

1. Practical consequencescounsel against recognizingclaims such as plaintiffsassert here ..............................21

2. Case-specific deferenceconcerns counsel againstrecognition of plaintiffs’claims ......................................25

CONCLUSION .......................................................28

APPENDIX .............................................................la

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TABLE OF CITED AUTHORITIES

Page(s)

CASES

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

Bell Atlantie Corp. v. Twombly, 127 S. Ct.1955 (2007) .........................................................24

Bi v. Union Carbide Chemicals andPlastics Co., 984 F.2d 582 (2d Cir.1993) ....................................................................26

Central Bank of Denvel; N.A. v. FirstInterstate Bank of Denver, N.A., 511U.S. 164 (1994) .......................................19, 20, 24

Dura Pharmaceuticals, Inc. v. Broudo,544 U.S. 336 (2005) ............................................23

Flores v. Southern Peru Copper Corp.,414 F.3d 233 (2d Cir. 2003) ................................15

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

Holmes v. Securities Investor ProtectionCorp., 503 U.S. 258 (1992) .................................23

In re African "American SlaveDescendants Litigation, 471 F.3d 754(7th Cir. 2006) .....................................................23

Jota v. Texaco, Inc., 157 F.3d 153 (2d Cir.1998) .................................................................... 26

Lujan g. De£ender~ o£ Wildlife, 504 U.S.555 (1992) ...........................................................23

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TABLE OF CITED AUTHORITIES--continued

Pa~e(e)

Masta£a v. Australian Wheat Board Ltd.,No. 07-CV-7955 (S.D.N.Y. filed Sept.11, 2007) ..............................................................12

Soeigtg NationMe IndustrielleAgrospatiale v. United States DistrictCourt for Southern District of Iowa, 482U.S. 522 (1987) ...................................................26

Sosa v. Alvarez’Maehain, 542 U.S. 692(2004) ...........................................................passim

Stoneridge Investment Partner~, L.L.C. v.Seienti~qe-Atlanta, Inc., 128 S. Ct. 761(2008) ............................................................22, 24

United States g. Youse£ 327 F.3d 56 (2dCir. 2003) ............................................................17

STATUTES AND TREATIES

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

Burmese Freedom and Democracy Act of2003, Pub. L. No. 108-61, 117 Stat. 864(2003) (codified at 50 U.S.C. § 1701note) ......................................................................8

Comprehensive Anti-Apartheid Act of1986, 22 U.S.C. § 5001 note (1988)(repealed 1993) .....................................................9

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TABLE OF CITED AUTHORITIES--continued

Page(s)

North American Free Trade Agreement,U.S.-Can.-Mex., Dec. 17, 1992, 32I.L.M. 289 & 605 ...................................................8

United States-Colombia Trade PromotionAgreement, U.S.- Colom., Nov. 22, 2006(congressional approval pending) ........................9

LEGISLATIVE AND EXECUTIVE MATERIALS

Executive Order No. 12532, 50 Fed. Reg.36,861 (Sept. 9, 1985) ...........................................9

National Security Council, Nationa]Strategy for Combating Terrorism(2003) ....................................................................7

Office of Foreign Assets Control, UnitedStates Department of the Treasury,Foreign Assets Control Regulations forthe Financial Community (2008) ........................8

State of the International FinancialSystem: Hearing Be£ore the HouseCommitee on Financial Services, 110thCong. 59 (statement of Henry M.Paulson, Jr., U.S. See’y of the Treasury)(2007) ....................................................................6

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TABLE OF CITED AUTHORITIES--continued

Page(s)

United States Department of State,Report to the Congress onIndustrialized Democracies’ Relationswith and Measures Against SouthAh’iea (1987) .......................................................10

INTERNATIONAL MATERIALS

United States v. yon Weizsgeeker (The

Ministries Case), 14 Trials of WarCriminals Before the NuernbergMilitmy Tribunals Under ControlCouncilLawNo. 10 (William S. Hein &Co., Inc. 1997) (1949) ..........................................16

MISCELLANEOUS

Lucien J. Dhooge, A Modest Proposal toAmend the Alien Tort Statute toProvide Guidance to TransnationalCo~porations, 13 U.C. Davis J. Int’l L.& Pory 119 (2007) ...............................................12

Condoleezza Rice, United StatesSecretary of State, Remarks at theBusiness Council (May 9, 2007) .......................6, 8

World Bank, Finance For Growth: PolicyChoices in a Volatile World (2001) .....................6

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Pursuant to Rule 37.2 of the Rules of thisCourt, The Clearing House Association L.L.C. ("TheClearing House"), American Bankers Association,Bankers’ Association for Finance and Trade,European Banking Federation, The FinancialServices Forum, The Financial ServicesRoundtable, Institute of International Bankers,Securities Industry and Financial MarketsAssociation, and Swiss Bankers Association(collectively, "amiei’), with the consent of allparties, respectfully submit this brief amiei curiaein support of petitioners American Isuzu Motors,Inc., et ~1.1

INTEREST OF THE A$ffCI ~’UR/AE

The Clearing House and the other smiei aredomestic and foreign organizations concerned withthe commercial banking and financial servicesindustries and important public policy issues

Counsel for all parties received notice at least 10 daysprior to the due date of amiei’s intention to file this brief.The parties consented to the filing of this brief, and lettersreflecting such consent have been filed with the Clerk. Nocounsel for any party authored this brief in whole or inpart, and no counsel or party made a monetarycontribution intended to fund the preparation orsubmission of this brief. No person or entity other thanamiei made a monetary contribution to the preparation orsubmission of this brief.

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affecting them.2 There will be an enormous impacton the business of their financial institutionmembers if a new, judicially created cause of actionfor secondary liability in tort for a foreign nation’sinternational law violations were to expose theseinstitutions to litigation in U.S. courts, andpotentially astronomical damage awards, forengaging in their basic businesses of lending andproving other ordinary financial services.

Amici respectfully submit that the petition forcertiorari should be granted because the Court ofAppeals for the Second Circuit has created greatuncertainty for financial institutions byerroneously exercising jurisdiction under the AlienTort Statute ("ATS"), 28 U.S.C. § 1350, over civilclaims against private actors for allegedly aidingand abetting international law violations, and byproviding conflicting guidance as to the standardupon which liability may be imposed. Thecontinuation of this litigation will have a chillingeffect upon the business of amiei’s members -business that is both critical to the economies of

The members of The Clearing House are ABN AMROBank N.V., Bank of America, N.A., The Bank of NewYork, Citibank, N.A., Deutsche Bank Trust CompanyAmericas, HSBC Bank USA, N.A., JPMorgan ChaseBank, N.A., UBS AG, U.S. Bank, N.A., Wachovia Bank,N.A., and Wells Fargo Bank, N.A. All amlcl are describedin the Appendix hereto. Certain members of theseorganizations or their affiliates are petitioners in thismatter.

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developing nations and an important component offoreign policy.

SUMMARY OF THE ARGUMENT

International financial institutions play a vitalrole in the economic growth and development ofdeveloping nations and, in turn, to achievingbroader goals of social justice, peace and stability.If the standard created by the Second Circuit as ameans of furnishing jurisdiction under the ATSwere permitted to stand, it would have asubstantial negative effect on this critical functionbecause financial institutions would curtail theiractivities in developing nations.

The global financial services business of amici’smembers, and the foreign trade and investmentthat it finances, are also important tools ininternational relations. These tools are bluntedwhen financial institutions are deterred by thespecter of potentially limitless tort liability eventhough the political branches wish to furtherforeign policy goals by encouraging participation inthe economy of a friendly nation that may have aquestionable human rights record. Moreover, U.S.international relations are strained when judicialexpansion of private tort liability threatens thefinancial institutions of our allies.

Plaintiffs would have the district court exercisejurisdiction over an unprecedented private tortclaim against U.S. and non’U.S, financialinstitutions for conduct that no international law

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norm recognizes as actionable - engaging infinancial transactions such as lending to anothernation and its citizens, consistent with the foreignpolicies of those institutions’ respectivegovernments at the time. To do so, however, wouldcontravene this Court’s direction in Sosa v.Alyarez-MavlbaYn, 542 U.S. 692 (2004), that a claimbased on the present-day law of nations must reston an international norm both accepted by thecivilized world and defined with specificity, as wellas that decision’s guidance on the other factors tobe considered before exercising jurisdiction underthe ATS over a private civil tort arising from aviolation of international law.

The Second Circuit reversed the district court’sorder dismissing the complaints in these actionsalthough there is no precedent in international lawfor imposing liability for the alleged conduct of thefinancial institutions or, indeed, for recognizingcivil aiding and abetting liability for private actorsgenerally. Further, the majority did not properlyconsider the significant collateral consequences,including the foreign relations implications, ofrecognizing such liability.

Finally, ~qosa directed that, in assessingparticular claims, federal courts should considerthe "practical consequences" of providing a federalforum for those claims, and whether case’specificdeference is appropriate. Sosa, 542 U.S. at 732"33.Here, the practical consequences of extending thescope of liability to the defendants for the conduct

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alleged militate strongly against exercising ATSjurisdiction over these claims. Moreover, and asthis Court suggested in Sost~ in discussing thesevery actions, case-specific deference is called fordue to the concerns raised by the governments ofthe United States and South Africa. For all thesereasons, the decision of the Second Circuit waserroneous and certiorari should be granted toreview it.

ARGUIV~ENT

I. CERTIORARI SHOULD BE GRANTEDBECAUSE THE DECISION BELOWTHREATENS THE ABILITY OF FINANCIALINSTITUTIONS TO PLAY THEIR VITALROLE IN INTERNATIONAL ECONOMICDEVELOPMENT AND FOREIGN RELATIONS

A. The Importance of Financial InstitutionParticipation in World Economies

Financial institutions, including amici’smembers, are critical to the global economy, andtheir participation in developing countries is vitalto the goals of economic development and growth.As the U.S. Treasury Secretary recently observed,"[f]inancial services are particularly important fordeveloping countries because they are linked toincreased economic growth and development...Cross’country analysis shows that greater

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involvement by private and foreign banks leads tomore efficient lending and higher growth.’’3

Developing nations’ economic development andparticipation in the global economy in turn helppromote broader goals of social justice, stability,and peace. The U.S. Department of State hasobserved that, "[a]s more nations have integratedinto the global economy, the number ofdemocracies in our world has increaseddramatically - and with this advance of freedomhas come greater stability and security and peace.’’4

By contrast, as stated by the National SecurityCouncil, "[w]eak states and failed ones are a source

State of the International Financial System: HearingBefore the H. Comm. on Financial Services, ll0th Cong.59 (2007); see also World Bank, Finance For Growth:Policy Choiees m a Volatile World 4 (2001) ("Mostdeveloping countries are too small to be able to afford todo without the benefits of access to global finance,including accessing financial services from foreign orforeign-owned financial firms. Facilitating the entry ofreputable foreign financial firms to the local marketshould be welcomed too: they bring competition, improveefficiency, and lift the quality of the financialinfrastructure.").

Condoleezza Rice, U.S. Sec’y of State, Remarks at theBusiness Council (May 9, 2007), available athttp:/lwww.state.govlsecretary/rm120071may184575.htm[hereinafter Sec’y of State Remarks].

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of international instability[;] [o]ften, these statesmay become a sanctuary for terrorism.’’5

Progress toward these goals will be underminedif financial institutions are fearful that by engagingin business in developing nations, many of whichhave imperfect human rights records, they maylater be held liable for abuses by those nations’governments.

The importance of the participation ofinternational financial institutions in developingcountries is forcefully demonstrated by the UnitedStates and South African governments’ statementsregarding the continuation of this litigation. In theStatement of Interest of the United States lodgedwith the district court, the Legal Adviser to theDepartment of State expressed concern thatadjudication of these cases "may deter foreigninvestment where it is most needed." Petitioners’Appendix ("App.") 245a. The Republic of SouthAfrica opposes continuation of this litigation in partbecause it interferes with that government’s effortto create an environment conducive to foreignprivate’sector investment, which it believes isimportant to "faster economic growth offer[ing] theonly way out of poverty, inequality, andunemployment." App. 305a.

Nat’l See. Council, National Strategy £or CombatingTerrorism 23 (2003), available a thttp:llwww.whitehouse.gov/news/releasesl2OO3lO2leounter_terrorism/counter terrorism_strategy.pall.

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B. The Importance of Financial Institutionsto Foreign Policy

Economic engagement and economic sanctionsare, respectively, carrots and sticks of U.S. foreignpolicy. See, e.g., Sec’y of State Remarks, supra n.4("[f]ree trade is a critical tool" in the effort to "fosterpeace and stability between states" by "promot[ing]prosperity, good governance, and social justicewithin states"); Office of Foreign Assets Control,U.S. Dep’t of the Treasury, Foreign Assets ControlRegulations for the Financial Community 2 (2008)("Economic sanctions are powerful foreign policytools.") .6

For example, the U.S. Department of theTreasury’s Office of Foreign Assets Controladministers and enforces laws and regulations thatimpose economic and trade sanctions againstcountries that are targeted based on various U.S.foreign policy goals, which include curtailingforeign human right violations. See, e.g., BurmeseFreedom 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 UnitedStates encourages financial sector involvement,including through treaties and free tradeagreements. See, e.g., North American Free TradeAgreement ch. 14, U.S.-Can.’Mex., Dec. 17, 1992,32 I.L.M. 289 & 605; United States’Colombia Trade

6 Available at http:l/www.ustreas.gov/offices/enforcement/ofac/regulations/facbk.pdf.

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Promotion Agreement ch.12, U.S.- Colom., Nov. 22,2006 (congressional approval pending), s vsllsb!e sthttp ://www.ustr.gov/Trade_Agree ments/Bilateral/Colombia_FTA/Final_Text/Section_Index.html.

The history of international dealings withSouth Africa during the apartheid era illustratesthat economic engagement and sanctions areexpressions of foreign policy. The regulation offinancial institutions’ and other entities’ businessin that country was a central part of the foreignpolicy of the United States, as well as otherwestern nations. By Executive Order in 1985,followed by the Comprehensive Anti-Apartheid Actof 1986 ("CAAA"), the United States placed somerestrictions on financing and trade, but did notmandate divestment or place a blanket ban onengaging 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 constructiveengagement policy of economic incentives andsanctions would promote the end of apartheid. See,e.g., 22 U.S.C. § 5002 (the purpose of the CAAAwas "to guide the efforts of the United States inhelping to bring an end to apartheid in SouthAfrica").

Other countries in which foreign financialinstitutions involved in this litigation are based(including the United Kingdom, France, Germany,and Switzerland) also pursued policies ofconstructive engagement, restricting but not

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prohibiting business dealings with South Africa,primarily as of the mid-1980s. See U.S. Dep’t ofState, Report to the Congress on IndustrializedDemocracies" Relations with and Measures AgainstSouth Africa 1-2, 17-21, 46-48, 50-52 (1987).

C. The Threat Posed by This Litigation

Plaintiffs have brought these actions seekingredress for the tens of millions of South Africanswho were injured by South Africa’s formerapartheid regime. They have sued over 50 U.S. andforeign corporations, including more than a dozenfinancial institutions, on the theory that by doingbusiness in or with South Africa these companiesaided and abetted the regime’s violations ofinternational law. App. 82a (Korman, J.). In short,plaintiffs disagree with the policy of constructiveengagement, and seek to have private entities thatacted in accordance with that policy held liable, intort, under the ATS.

Specifically as to the financial institutiondefendants, plaintiffs allege that these corporationsextended loans and other financing to thegovernment of South Africa and South Africanentities, and that such transactions helped "’insurethat ]the apartheid] system could function.’" App.83a (Korman, J.) (quoting complaint). They do notallege that these defendants acted with the intentof furthering the apartheid regime’s internationallaw violations. App. 137a (Korman, J.). They donot link the injuries of any particular individual to

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the conduct of any particular defendant, nor dothey intend to attempt to do so. App. 84a-85a(Korman, J.). Rather, they broadly assert that"’any transfer of capital’" to South Africa aided andabetted apartheid: "’loans to the railways andharbors systems assisted in the mobilization of thearmed forces; trade financing provided thecomputers and telecommunications equipmentnecessary to the efficient functioning of a modernarmy; [and] financing for housing projectperpetuated the segregated housing of apartheid."’App. 83a-84a (Korman, J.) (quoting complaint).

These claims, based on a highly speculative andattenuated theory of causation, threateninternational financial institutions with virtuallylimitless liability for having engaged in normalbusiness activities that were fully consistent withtheir home nations’ foreign policies at the time.

Imposing liability upon financial institutionsand other entities for the conduct alleged in theseactions would constitute judicial second-guessing ofour political branches’ foreign relations policy ofconstructive engagement and thus raise seriousseparation of powers concerns. In addition, theexistence of this litigation already has strainedrelations with U.S. allies who have expressed"profound concern" to the U.S. Department of Statethat their banks and corporations are named asdefendants in these actions. App. 245a.

Moreover, the Second Circuit’s recognition ofliability for doing business with and in a nation

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that has engaged in international law violationsalso threatens the ability of financial institutions toplay their vital and salutary role in global economyand foreign relations. See Lucien J. Dhooge, AModest Proposal to Amend the Alien Tort Statuteto Provide Guidance to Transnational Corporations,13 U.C. Davis J. Int’l L. & Pol’y 119, 134 (2007)(recognizing ATS liability for foreign state violationof international law "greatly increases the riskassociated with foreign investment activities,"which "could serve to significantly curtail futureforeign investments as well as commercialactivity"). As Judge Korman recognized, themajority’s "newly minted theory of aiding-and"abetting liability" generates "tremendousuncertainty for private corporations .... Thisuncertainty, in turn, will undermine efforts by theUnited States to encourage reform in thesecountries through active economic engagement."App. 163a-164a (citation omitted).

Plaintiffs seek numerous forms of equitable,compensatory, and punitive relief, including $400billion in damages, and the cost of defending thislitigation alone is daunting. Further, the claimshere are not unlike those of other ATS actions thatsimilarly would make financial institutions thatengaged in normal banking transactions liable tovast numbers of individuals injured by a foreigngovernment. See, e.g., Mastafa v. Austl. 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

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1996 through March 2003, alleging French bankmaintained a United Nations escrow account fromwhich funds were disbursed to the regime). In thewake of the Second Circuit’s decision, financialinstitutions will inevitably be exposed to additionalcostly suits seeking many hundreds of billions ofdollars in damages.

The prospect of further litigation can beexpected, at a minimum, to raise the cost of doingbusiness internationally, as well as to causefinancial institutions to curb their activities inforeign nations with problematic human rightshistories. Indeed, the very pendency of theseactions threatens to impede the Executive andLegislative branches’ ability to encourage economicactivity that may be an important component ofU.S. relations with a friendly nation. See U.S.Statement of Interest (to the extent this litigationdeters foreign investment in the developing world,"it will compromise a valuable foreign policy tool").App. 246a. For these reasons, certiorari should begranted to review the Second Circuit’s decision togreatly expand the potential liability of institutionsoperating internationally.

II. THE DECISION BELOW IS INCONSISTENTWITH SO£/A AND CERTIORARI SHOULD BEGRANTED TO UNDO ITS UNWARRANTEDEXPANSION OF FEDERAL JURISDICTION

This Court held in Sosa that jurisdiction underthe ATS depends on the recognition of a private

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tort claim for violation of an international lawnorm, and directed that federal courts should notrecognize a claim if the norm has "less definitecontent and acceptance among civilized nationsthan the historical paradigms familiar when § 1350was enacted." 542 U.S. at 732. The Court exhortedthe lower courts to practice "vigilant doorkeeping"in determining whether to recognize a civil tort forviolation 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 toprivate rights," id. at 728. Among those reasons isthat there may be "collateral consequences [to]making international rules privately actionable,"including consequences that may implicate foreignrelations. Id. at 727. As discussed above, theimposition of liability for engaging in customaryfinancial transactions with or in another nationwould have tremendous collateral consequences,chilling the cross’border investment that is criticalto developing nations and an integral component ofU.S. foreign policy.

So~a also instructed that in assessing aplaintiffs particular claims, courts must exercisejudgment about the "practical consequences" ofmaking them available to litigants in the federalcourts, and, where appropriate, practice "case"specific deference" in limiting ATS jurisdiction. 542U.S. at 732-33 & n.21 (specifically noting that thislitigation presented "a strong argument" for suchcase-specific deference).

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Disregarding these clear instructions, theSecond Circuit opened the door to private tortclaims that have no basis in international law,greatly expanding the scope of potential liability forfinancial institutions without regard to theconsequences of doing so, and remanded the matterfor further proceedings although case-specificdeference was called for in the jurisdictionalanalysis.

A. The Financial Institution ActivityComplained of Is Not Actionable UnderEstablished International Law

The complaints in these actions were properlydismissed by the district court because there is noprecedent in international law for imposing liabilityupon a private entity for doing business in or witha country that commits international lawviolations. None of the purported international lawsources relied upon by plaintiffs or the SecondCircuit majority recognizes such conduct asactionable.

To the contrary, the most factually similarauthority cited by plaintiffs and the Second Circuit,decisions from the Nuremberg tribunals, supportsthe proposition that engaging in the financingactivities allegedhere does not violateinternational law. Although the Nurembergdecisions are not competent sources of customaryinternational law, see Flore8 v. S. Peru CopperCorp., 414 F.3d 233, 250-52, 263-64 (2d Cir. 2003),

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one such decision, addressing charges broughtagainst a bank executive for lending money to"various SS enterprises," is instructive.Thetribunal specifically held:

Loans or sale of commodities to beused in an unlawful enterprise ...can hardly be said to be a crime.Our duty is to try and punish thoseguilty of violating international law,and we are not prepared to statethat such loans constitute aviolation of that law ....

United States v. yon Weizs~eeker ("The Ministries

Case"), 14 Tlials of War Criminals Before theNuernberg Milita~y Tribunals Under ControlCouncil 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 ofinternational law establishing liability as to privateactors for engaging in business with--andparticularly, by providing financing to---States thatviolate international law. App. 79a-80a.

Expanding concepts of international lawliability to normal lending and business activitieswould be particularly inappropriate in the contextof this litigation given the constructive engagementpolicies of the United States and other westerncountries toward business with South Africa,discussed above. A principle in conflict with thepractices of civilized nations cannot qualify as acustomary international law principle, United

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States v. Youse£ 327 F.3d 56, 92 n.25 (2d Cir.2003), let alone one that has as "definite [a] contentand acceptance among civilized nations [as] thehistorical paradigms familiar when [the ATS] wasenacted," Sosa, 542 U.S. at 732.7 The theory thatfinancial institutions and other entities committedviolations of international law by engaging inbusiness activities that were permitted by the lawsof their States of incorporation at the time, bothraises concerns of retroactive application of a newstandard of liability to conduct that wasundertaken decades earlier,s and ignores the

Of course, engaging in customary banking’relatedactivities is nothing like the historical paradigms foractionable international law violations, specificallyoffenses such as physical assaults against ambassadors,violations of safe conduct, and prize captures and piracy.That fact alone should have warranted greater caution inrecognizing a private civil action here. The allegationthat by engaging in financing activities the financialinstitutions aided and abetted South Africa’sinternational law violations is also completely unlike thematters addressed in the authorities relied on by JudgeHall (involving direct participation by American citizensin hostile acts at sea or against a foreign settlement) assupport for the notion that "the Founding Generation...understood the ATCA encompassed aiding and abettingliability," App. 70a n.5; as correctly pointed out by JudgeKorman, these authorities do not support the broadproposition advanced by Judge Hall, App. 159a-163a.

For ATS jurisdiction, the international law norm allegedto be violated must have had the requisite level ofacceptance and specificity at the time of the conduct atissue. See App. 152a-154a (Korman, J.) (noting that

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domestic laws of civilized nations as a fundamentalsource of international law. See, e.g., Sosa, 542 U.S.at 734 (recognizing the "customs and usages ofcivilized nations" as a source of international law)(internal quotation marks omitted).

B. The Second Circuit Erroneously CreatedCivil Aiding and Abetting Liability

Each member of the Second Circuit panelinterpreted Sosa differently, resulting in threeindividual 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 ineffect at the time of the conduct alleged that wouldhold private individuals or corporations liable foraiding and abetting the government crimesunderlying these actions, and therefore would haveupheld the dismissal of the complaints. App. 122a-180a. Two members of the panel voted to reversethe order of dismissal, however, erroneously findingATS jurisdiction over aiding and abetting claims.Judges Katzmann and Hall disagreed with eachother over the basis on which to recognize civilaiding and abetting liability as well as the standardfor imposing it, inadvertently but clearlyillustrating the lack of consensus and specificity

domestic and international law both prohibit retroactiveapplication of legislation).

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required under So8~ before an international lawnorm may provide a basis for ATS jurisdiction.

Judge Katzmann agreed with Judge Kormanthat international law must govern not only whatconstitutes an international law violation but alsothe scope of liability for such a violation. Butunlike Judge Korman, Judge Katzmann reliedupon international criminal law to determinewhether there is ATS jurisdiction over eigi] claims.App. 32a-48a. International criminal law does notprovide a basis for finding an establishedinternational law norm for civil aiding and abettingliability as to private actors, however. In CentralB~nk of Denvel; N.A. v. First Interstate B~nk ofDenver; N.A., this Court refused to make a similarleap, stating that although there is criminalliability for aiding and abetting criminal violationof Section 10(b) of the Securities Exchange Act of1934, "it does not follow that a private civil aidingand abetting cause of action must also exist," anddeclining to find one. 511 U.S. 164, 190-91 (1994).

Further, So~’s requirement that aninternational norm be defined with specificity wasnot satisfied by this approach because, as JudgeKatzmann acknowledged, there is a lack ofconsensus as to the mens re~ requirement foraiding and abetting liability in the criminal lawsources upon which he relied. App. 43a-48a. JudgeKatzmann adopted a test that would imposeliability where the defendant provided "practicalassistance" to the primary violator that had a

2O

"substantial effect," and did so "with the purpose offacilitating the commission of th[e] crime." App.47a.

Judge Hall, in contrast, consideredinternational law relevant solely for determiningwhether the alleged conduct of the primary actorconstituted a violation, deeming it irrelevantwhether international law recognizes aiding andabetting liability. This approach is directlycontrary to the statement in Sosa that courts mustconsider "whether international law extends thescope of liability.., to the perpetrator being sued.¯ . such as a corporation or individual." 542 U.S. at732 n.20. Despite this Court’s admonitions in Sosaagainst creating new private rights of action, id. at725-28, Judge Hall created a new law of civil aidingand abetting liability in ATS cases. He claimed tobe applying the "standard articulated by the federalcommon law." App. 68a. This Court has recognized,however, that the concept of aiding and abettingthe tortious conduct of another "has been at bestuncertain in application." Centl’~] B~nk, 511 U.S.at 181.

Judge Hall would set a far lower bar forimposing liability than Judge Katzmann. Underthis test, a defendant need not have acted with thepurpose of facilitating an international lawviolation; "knowingly and substantially assisting"the principal tortfeasor, "encouraging, advising,contracting with, or otherwise soliciting" withactual or constructive knowledge of the principal’s

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violation, or providing the "tools, instrumentalities,or services" to commit the violations with active orconstructive knowledge, would suffice. App. 71a.This broad definition could be read to render aparty liable for making a loan to a borrower that itdid not know, but allegedly should have known,was engaged in wrongdoing, a result that wouldconstitute a substantial expansion of internationallaw.

C. The Second Circuit Ignored theGuidance of Sosa in Deciding Whether toRecognize the Private Claims AssertedHere Against Financial Institutions

1. Practical consequences counselagainst recognizing claims such asplaintiffs assert here.

In requiring courts to evaluate the "practicalconsequences" of recognizing a plaintiffs claims inan ATS action, this Court noted the relevance ofwhether international law extends the scope ofliability for the given international law violation tothe particular type of actor being sued. Sosa, 542U.S. at 732 n.20. Here, recognizing plaintiffs’claims against financial institutions for engaging intheir customary business would have practicalconsequences that counsel against exercising ATSjurisdiction.

This Court recently had occasion to evaluatethe "practical consequences of an expansion [of

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liability]" in Stoneridge Investment Partners,L.L.C.v. Seientit~e’Atlanta, Inc., 128 S. Ct. 761(2008), in which it affirmed that the private right ofaction under Section 10(b) should not be extendedto so-called "scheme liability." The Court notedthat lawsuits such as the one before it that involve"extensive discovery and the potential foruncertainty and disruption.., allow plaintiffs withweak claims to extort settlements from innocentcompanies," and was reluctant to "expose a newclass of defendants to these risks." Id. at 765. The"practical consequences" might involve raising thecost of doing business, and deterring overseas firmsfrom doing business in the United States. Id. at764-65.

The parallels between Stoneridge and theseactions extend well beyond the fact that both casesinvolve federal statutes onto which plaintiffs wouldengraft expansive theories of liability without acongressional mandate to do so. See Sosa, 542 U.S.at 726 ("the general practice has been to look forlegislative guidance before exercising innovativeauthority over substantive law"). These actionsalso squarely present the concern expressed by theCourt in Stoneridge with recognizing a private civilclaim where the defendants’ conduct is "too remote"from the plaintiffs’ injury. Stonerid~e, 128 S. Ct. at769-70. Allegations that, but for the defendants’"involvement" in South Africa, apartheid "wouldhave ended in 1985," or "would not have occurred inthe same way," and therefore plaintiffs would nothave been injured or would not have been injured

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in the same way, would unmoor liability from anyreasonable concept of causation. See, e.g., Holmesv. Sea Investor Protection Corp., 503 U.S. 258, 268(1992) (requiring in RICO context a "direct relationbetween the injury asserted and the injuriousconduct alleged"); cf. Dura PtSarrn., Inc. ~. Broudo,544 U.S. 336, 346 (2005) (requiring in securitiescontext that "defendant’s [alleged conduct]proximately caused the plaintiffs economic loss"). 9

Additionally, to describe as "extensive" thediscovery that would be required should thislitigation continue would be a grossunderstatement. These actions are brought againstscores of defendants located both in and outside ofthe United States, on behalf of millions of peoplefor whose individual injuries redress is sought,

In an action by the descendants of slaves allegedly injuredbecause, had defendants not "do[ne] business withslaveowners, there would have been less slavery," theCourt of Appeals for the Seventh Circuit held thoseplaintiffs lacked standing, stating "this causal chain is toolong and has too many weak links for a court to be able tofind the defendants’ conduct harmed the plaintiffs at all,let alone in an amount that could be estimated withoutthe wildest speculation." In re Ah’ican’Ameriean SlaveDeseondantsLitig., 471 F.3d 754, 759 (7th Cir. 2006). Seealso Lujan v. Defe~2ders of Wildlife, 504 U.S. 555, 560(1992) (standing requires "a causal connection betweenthe injury and the conduct complained of’); Allen v.W~’ight, 468 U.S. 737, 759 (1984) ("The links in the chainof causation between the challenged . . . conduct and theasserted injury are far too weak for the chain as a wholeto sustain respondents’ standing.").

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cover a span of 45 years, and center on activityundertaken in a foreign country, primarily by itsformer governing regime. Judge Korman notedthe absence of any ’"reasonable expectation thatdiscovery will reveal evidence’ to support [theallegations of plaintiffs’ complaints]," even if thosepleadings are amended yet again. App. 85a(quoting Boll Atl. Corp. v. Twombly, 127 S. Ct.1955, 1965 (2007)). If these actions are allowed toproceed, discovery will by any measureundoubtedly be extensive.

This litigation also raises concern, expressed inStoneridge, over "extort[ed] settlements." As JudgeKorman observed, recognizing federal jurisdictionin these cases "would simply provide a vehicle tocoerce a settlement." App. 85a; ~oo al~o CentralBank, 511 U.S. at 189 (due to the uncertainty ofrules governing aiding and abetting liability,entities "may find it prudent and necessary, as abusiness judgment, to abandon substantialdefenses and to pay settlements in order to avoidthe expense and risk of going to trial"). Thatplaintiffs here seek, among other forms of relief,more than $400 billion in damages substantiatesJudge Korman’s observation. The cost of defendingthese and similar ATS actions alone would be sostaggering that further litigation can be expected toraise the cost of doing business and potentiallydecrease foreign firms’ interest in the U.S. market.

Finally, and as noted above, permitting thecontinued prosecution of this litigation would

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inevitably increase the number of massive andunmanageable cases brought under the ATS onsimilarly attenuated theories.

2. Case-speclflc deference concernscounsel against recognition ofplaintiffs’ claims.

It was improper for the Second Circuit majorityto refuse to consider case-specific prudentialconcerns because this Court has identified suchconcerns as among the "principle[s] limiting theavailability of relief in federal courts" under theATS for violations of customary international law.Sos,~, 542 U.S. at 733 n.21. Thus, considering theselimitations does not, as the Second Circuit majoritycontended, improperly conflate the jurisdictionalanalysis with the cause of action analysis; rather,such an examination is part of courts’ jurisdictionalanalysis whether to allow a private right of actionto proceed, as correctly noted by Judge Korman.See App. l16a-l19a. Consideration of the case-specific concerns at issue here, deference to thepolitical branches and comity, demonstrates thatthese concerns mandate dismissal of this litigation.

First, in referring to "case-specific deference tothe political branches," this Court in Sos,~specifically pointed to these very cases, noting that"[i]n such cases, there is a strong argument thatfederal courts should give serious weight to theExecutive Branch’s view of the case’s impact onforeign policy." Sosa, 542 U.S. at 733 n.21. The

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Statement of Interest of the United States indicatesthat this lawsuit, and others of its type, will causesignificant foreign relations problems, both withthe countries with which the United States istrying to engage, and with allies whose financialinstitutions are being subjected to U.S. courts’evaluation of conduct that they engaged inconsistently with their own countries’ policies.App. 244a-246a.

Second, comity concerns counsel that, becausethis litigation "touch[es] the laws and interests ofother sovereign states," Soeigtg NationaleIndustrielle Agrospatiale v. U.S. Dist. Court £o1" 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 SouthAfrica, Hilton v. Guyot, 159 U.S. 113, 164 (1895).U.S. courts should "defer to the judgment of ademocratic foreign government" regarding how"disputes arising from a mass tort occurring withinits borders can be best resolved," to avoiddisrupting relations with that government andfrustrating its efforts in setting up "what it believesto be the most effective method of dealing with adifficult problem." Bi v. Union Carbide Chem. &Plastics Co., 984 F.2d 582, 583, 586 (2d Cir. 1993)(affirming dismissal of claims where Indiangovernment determined interests of Indian masstort victims would be best served if it exclusivelyrepresented victims in all litigation and funded aplan to process all their claims); see also Jota v.Texaco, Inc., 157 F.3d 153, 160 (2d Cir. 1998)

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(deference should also be given "to the officialposition of a foreign state.., on matters concerningactions of the foreign state taken within or withrespect to its own territory").

Here, deference should be accorded to theSouth African government’s prerogative to addressmatters relating to its nation, through policies andprograms it has established to compensate thevictims of apartheid and redress its effects--particularly in light of that government’srepeatedly expressed view that this litigation is anaffront to its sovereignty, a violation of its publicpolicy of reconciliation, and a threat to its attemptsto attract foreign investment as part of an effort toalleviate the very injuries alleged by plaintiffs.App. 290a-292a, 296a-300a, 304a-313a, 316a.

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CONCLUSION

For the reasons stated above, the petition for awrit of certiorari should be granted.

Respectfully submitted,

THOMAS C. RICECou~se] of Record

MARY ELIZABETH MCGARRYAGNI~S DUNOGUI~SIMPSON THACHER ~ BARTLETT LLP

425 Lexington AvenueNew York, NY 10017(212) 455-2000

Counsel for Amiei Curiae

February ll, 2008