Awakening Monster: The Alien Tort Statute of 1789 (Policy Analyses in International Economics)

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Within the next decade, 100,000 Chinese class action plaintiffs, organized by New York trial lawyers, could sue General Motors, Toyota, General Electric, Mitsubishi, and a host of other blue-chip corporations in a US federal court for abetting China’s denial of political rights, for observing China’s restrictions on trade unions, and for impairing the Chinese environment. These plaintiffs might claim actual damages of $6 billion and punitive damages of $20 billion. Similar blockbuster cases are already working their way through federal and state court systems. How could this nightmare scenario become a reality? Because of a little-known, one sentence law enacted in 1789— the Alien Tort Statute (ATS): "The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." In this analysis, Hufbauer and Mitrokostas examine the chilling impact the ATS could have on trade and foreign direct investment. They trace its history from the original intent to recent court interpretations, including a look at class-action suits over asbestos and apartheid. They provide an economic picture of the potential scope of ATS litigation, cite the possible collateral damage, and review the impact that ATS rulings could have on global relations. The authors recommend measures Congress should take to limit expansive court interpretations. The study is a must-read for policymakers, international lawyers, and students.

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Gary Clyde Hufbauer, Reginald Jones Senior Fellow, was formerly a Marcus Wallenberg Professor of International Finance Diplomacy at Georgetown University (1985–92); Deputy Director of the International Law Institute at Georgetown University (1979–81); Deputy Assistant Secretary for International Trade and Investment Policy of the US Treasury (1977–79); and Director of the International Tax Staff at the Treasury (1974–76). He has written extensively on international trade, investment, and tax issues. He is coauthor of NAFTA and the Environment: Seven Years Later (2000), World Capital Markets: Challenge to the G-10 with Wendy Dobson (2001), coeditor of Unfinished Business: Telecommunications after the Uruguay Round (1997), Fundamental Tax Reform and Border Tax Adjustments (1996), Measuring the Costs of Protection in the United States (1994), NAFTA: An Assessment (rev. 1993), US Taxation of International Income (1992), and numerous other publications and papers. Nicholas K. Mitrokostas received his J.D., magna cum laude, from Georgetown University Law Center in May 2003 and will clerk for the Honorable Judith A. Cowin of the Supreme Judicial Court of Massachusetts.