Issue 3

International Human Rights in American Courts

In “International Human Rights in American Courts,” Judge William Fletcher analyzes the implications of the Supreme Court’s recent opinion in Sosa v. Avarez-Machain. The plaintiff in Sosa brought suit for tortious violation of customary international law under 28 U.S.C. § 1350, the Alien Tort Statute (“ATS”). The Court held that the federal courts can enforce norms of customary international law in suits brought under the ATS only if the norms are established with sufficient clarity to satisfy the restrictive criteria set forth in the Court’s opinion.

According to Judge Fletcher, the Court answered two questions in Sosa. First, there is a limited federal common law of international human rights based on customary international law. Second, that federal common law is both jurisdiction-conferring in the sense of “arising under” federal law, and supreme in the sense of the Supremacy Clause. Professors Jack Goldsmith and Curtis Bradley, among others, had raised questions about the legitimacy of the line of human rights cases based on customary international law that began with the Second Circuit’s 1980 decision in Filartiga v. Pena-Irala. The Court’s response was that, within the scope of the federal common law permitted by Sosa, Filartiga remains good law.

However, the Supreme Court in Sosa did not answer questions about the possible preemptive scope of the federal common law on international human rights. Judge Fletcher explores three examples — (1) a wholly international case in which an alien sues another alien for a violation of international human rights abroad; (2) a partially international case in which an alien sues an American corporation for such a violation abroad; and (3) a wholly domestic case in which a defendant in a American court contends that a State’s death penalty violates international human rights. Judge Fletcher points out that these preemption questions are going to arise in both state and federal courts. He further points out that the federal courts may, in some cases not covered by federal common law, be required by Erie Railroad v. Tompkins to follow state courts’ decisions on questions of international human rights.

Treaties’ Domains

When and why do American judges enforce treaties? Today’s dominant theory of treaty enforcement is the doctrine of “self-execution,” which suggests that judicial enforcement of treaties is deduced from the nature of the treaties signed. The theory holds that some treaties are written so as to be directly enforceable, just like a statute, with full domestic effects, while other treaties are written so as to create duties only under international law. Unfortunately, as most scholars recognize, the doctrine is perplexing and of limited predictive value.

This Article, based on a new study of the history and record of treaty enforcement, provides a different theory as to when treaties are actually enforced in American courts. It finds that the question of whether a treaty is “self-executing” is acting as a proxy for questions of institutional deference. A good guide to treaty enforcement across the history of the United States is whether it is Congress, the Executive, or a State accused of breach. 

The basic treaty enforcement question is, and has been, whether the alleged act of treaty breach justifies a judicial remedy. Judicial deference to Congressional action with respect to a treaty is to be expected. Conversely, the judiciary will continue to use treaty law to prevent States from putting the United States in violation of its international obligations. As to the Executive, the judiciary should begin to explain why, in terms of deference, it is or is not choosing to enforce a treaty against Executive breach.

Economic and Legal Boundaries of Firms

Two types of theories of the firm have emerged in scholarship. Economic theories concern the allocation of control rights and residual claims: a firm is a group of assets under common ownership. Legal theories focus on the legal significance of firm boundaries: each firm is a legal person. Thus, assets may be economically integrated under common control and yet be partitioned between distinct legal entities. This paper presents a theory of legal boundaries that focuses on the choice of capital structure, and traces the interplay between economic integration and legal partitioning. The law treats many capital structure decisions, including both financial and governance choices, as in personam rather than in rem. Thus, these decisions must be made firm-wide; these include the issuance of debt or equity, the adoption of takeover defenses, and the composition of the board of directors. Yet, the determinants of optimal capital structure are often asset-contingent. For example, the amount of leverage, the desirability of takeover defenses and the number of independent directors may vary with the industry. The resulting tension is significant in the choice of firm boundaries. If two groups of assets have divergent capital structure demands—in that the optimal design of financial and governance rights related to each group is different—then either the assets are put in separate firms that tailor capital structure to their respective asset groups or they are combined in a single firm with a blended capital structure. We suggest that legal integration into a single firm sacrifices efficiency in some cases, but not in others. Where the efficiency losses are large enough to offset countervailing advantages from legal integration, legal partitioning might occur. We also demonstrate, however, that legal partitioning may undermine the benefits from economic integration, even if the discrete firms are kept under common control, as that concept is defined in law. Our theory thus suggests additional factors to be considered in explaining the structure of combinations (such as mergers or acquisitions) and divestitures (such as spin-offs, carve-outs or securitizations).

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