Why is Turkcell suing MTN in America?

As we all know, MTN is having some legal troubles over its alleged misconduct vis-à-vis Iran. In point of fact, MTN is being sued for $4.2bn by Turkish cellphone giant Turkcell, which alleges that MTN colluded with the South African government to bribe its way into Iran’s good books and thus win a license to provide mobile services in Iran.

What immediately struck me as the weirdest thing about Turkcell’s lawsuit, however, was not the dramatic allegations, nor the damning appended memos which are alleged to be internal  MTN documents, but rather the fact that the whole ball of wax was lodged with the federal courts in the District of Columbia, as in Washington, D.C.

Why, I wondered, was a Turkish company suing a South African company for offences allegedly committed in Iran in American courts? And, furthermore, why on earth would the American courts want to hear this case in the first place?

I took my questions to several lawyers and law professors, and came up with the following answers.

Turkecell is suing MTN under America’s 1789 Alien Tort Statute (more properly known as the Alien Tort Claims Act), which grants US courts jurisdiction in the case of offenses committed by aliens (that is, non-citizens, and not people from other planets) in violation of the law of nations or a treaty of the United States.

For most of its two-hundred-year history, no one used the ATS, but from the 1980s onwards, it gained traction as the legal basis for cases involving human rights violations outside of the US, especially torture and illegal detainment, which American courts decided were definitely “violations of the law of nations” (a requirement for the ATS to apply).

In general, such cases involved people who had become US citizens suing people who tortured or abducted them in their home countries before they became US citizens. US courts have generally heard such cases, but only when the perpetrators could be “properly served” (that is, arrested, informed of their rights, subpoenaed, and so on) inside the USA, and when the perpetrators were acting under state sanction – in other words, you couldn’t sue a homicidal maniac who kidnapped you and tortured you, but you could sue a police official who did so under the auspices of his home state. Clearly, Turkcell’s case is not one of these.

ATS law is, however, constantly evolving. The most recent, and relevant, case under the ATS is Kiobel v. Royal Dutch Petroleum (aka Shell), which is aimed at expanding the scope of the ATS to apply to corporations as well as natural persons.

In the Kiobel case, a group of Nigerians are suing Shell for allegedly facilitating and planning torture and murder in Nigeria’s oil-rich Niger delta. The case has wound its way up the federal ladder, and is now before the Supreme Court (the US equivalent of the Constitutional Court).

The case involves major human rights violations, which puts it firmly in the established ATS bailiwick; however, the Supreme Court has unexpectedly asked counsel on both sides to file briefs explaining exactly why they think that the US courts are the right forum for a case of alleged corporate misconduct in a faraway country – the specific question the lawyers must answer is “Whether and under what circumstances the Alien Tort Statute… allows courts to recognize a cause of action for violations of the law of nations occurring within the territory of a sovereign other than the United States?”

Kiobel was, as I said, originally seen as a way of expanding the ATS to include corporate liability for human rights violations, but the unexpected turn of events in the Supreme Court seems to indicate that the Court is considering limitations to the kinds of cases that can be heard in America under the ATS. If the Court decides that America doesn’t have jurisdiction in the case of Kiobel, which involves a very clear violation of international laws, then there’s no way US courts will hear Turkcell’s case, which involves a much more nebulous violation in the form of bribery and illegal arms sales.

It’s obvious why Turkcell wants to sue in America – the US has a very rigorous process of “discovery”, under which both parties in the lawsuit are given wide ranging access to the other party’s documents, confidential memos, letters, e-mails and so on. Turkcell is hoping that, if the case is allowed to proceed in the US, it will be given wide latitude to access MTN’s records during the process of discovery. However, it’s far from clear that this case has any business in US courts, especially given the Supreme Court’s recent response to Kiobel.

Turkcell is not alleging that MTN was involved in human rights violations like torturing Iranian dissidents, which US courts have found to be violations of the law of nations, meaning that it’s on shaky ground under the ATS. Furthermore, US courts have not yet decided whether or not the ATS applies to corporations as well as natural persons. If nothing else, the Turkcell case won’t proceed until the Supreme Court makes a decision on jurisdiction in Kiobel, and even then, MTN will be able to make a strong argument that the US has no jurisdiction in what is essentially a fight between two corporations. Although MTN’s lawyers are not commenting on their strategy, it seems likely that their first move will be to get the case thrown out entirely on the basis of jurisdiction, and they have a good shot at that.

Source: Moneyweb

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