The US Supreme Court on Wednesday significantly limited the scope of a 224-year-old federal statute that allows foreign residents to file civil lawsuits in US courts for violations of international law.

The high court said it would apply a general presumption that the 1789 Alien Tort Statute (ATS) does not extend US jurisdiction to human rights violations that take place in a sovereign foreign country.

“There is no indication that the ATS was passed to make the United States a uniquely hospitable forum for the enforcement of international norms,” Chief Justice John Roberts wrote.

The decision undercuts what had been a growing area of international human rights litigation in US courts seeking to hold multinational corporations accountable for human rights abuses that take place in foreign countries where they are conducting business.

Human rights groups denounced the decision as a setback, while business groups praised it as a step forward in helping to clarify liability for international corporations.

“The US Supreme Court’s decision today ensures that trial lawyers cannot continue to use the American judicial system to expose global businesses to frivolous and costly lawsuits,” Thomas Donohue, president of the US Chamber of Commerce, said in a statement.

Elisa Massimino, president of Human Rights First, said the ruling “gutted” the statute. “This decision cuts a hole into the web of accountability,” she said. “Human rights abusers may be rejoicing today, but this is a major setback for their victims, who often look to the United States for justice when all else fails.”

The case before the court involved a 2002 lawsuit against Royal Dutch Petroleum by 12 Nigerians charging that the oil company aided and abetted the Nigerian military in human rights abuses against the local population in the oil-rich Ogoni region in the 1990s.

Even though the corporation was a Dutch company with offices in the United Kingdom, the Nigerians filed their lawsuit in federal court in New York to take advantage of the broad scope of the ATS.

The suit included allegations of torture, extrajudicial execution, arbitrary detention, and crimes against humanity from 1992 to 1995, during a government crackdown against local residents protesting environmental damage because of oil exploration and production.

Lawyers for the oil company argued that corporations cannot be held liable in US courts for alleged violations of international law under the ATS. They urged the high court to declare that the ATS does not extend to conduct by non-US foreign corporations in a foreign country.

Human rights lawyers urged the courts to uphold broad enforcement efforts under the ATS, arguing that nothing in the text of the 1789 statute restricts its scope.

A federal judge upheld much of the suit, but an appeals court ruled that corporations could not be sued under the ATS for violations of the law of nations.

On Wednesday, the Supreme Court affirmed the appeals court decision dismissing the case, but on grounds that the suit was barred by a presumption that US laws do not apply in foreign countries unless Congress clearly states that they shall.

Five of the court’s nine justices agreed that the presumption against extraterritoriality should apply in the Nigeria case.

The four other justices agreed with the majority that the case should be dismissed, but they disagreed with Chief Justice Roberts’s application of the extraterritoriality principle.

Justice Stephen Breyer said he would decide the case by applying principles of international law, but only in cases with a closer connection to American territory and American interests.

Justice Breyer added that in his view, America has a “distinct interest in preventing the United States from becoming a safe harbor for a torturer or other common enemy of mankind.”

In a concurrence, Justice Anthony Kennedy said that the majority decision did not close the door entirely on ATS suits involving overseas actions with a stronger connection to the US.

In his majority opinion, Roberts said that “even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application.”

Some analysts said the decision suggests that the court is still feeling its way through the ATS puzzle and that the decision is likely to generate more litigation than it resolves.

“It is fairly clear that the court is still uncertain about the extent to which the Alien Tort Statute allows for claims for human rights violations that arise outside the United States,” said Paul Hoffman, who argued the case at the high court on behalf of the Nigerian plaintiffs.

In the majority opinion, Roberts said there was nothing in the statute to suggest that Congress intended that causes of action under the ATS could have extraterritorial reach.

The ATS was passed after “two notorious episodes” in the young nation’s history, the chief justice said.

In 1784, a French adventurer verbally and physically assaulted the secretary of the French Legion in Philadelphia. The French minister plenipotentiary lodged a formal protest with the Continental Congress and threatened to leave the country unless the government provided an adequate remedy.

In 1787, a New York constable violated diplomatic protocol when he burst into the Dutch ambassador’s house to arrest one of his servants.

Shortly after passage of the ATS, it was invoked to resolve disputes over the wrongful seizure of slaves in a ship in a US port and a wrongful seizure in US territorial waters.

“These prominent contemporary examples – immediately before and after passage of the ATS – provide no support for the proposition that Congress expected causes of action to be brought under the statute for violations of the law of nations occurring abroad,” Roberts said.

He acknowledged that the ATS is widely recognized to apply to pirates and acts of piracy on the high seas. Supporters of a broad view of ATS jurisdiction pointed to coverage of piracy as evidence of the statute’s extraterritorial application.

But Roberts dismissed the argument. “Pirates may well be a category unto themselves,” he said.

He noted: “Pirates were fair game wherever found, by any nation, because they generally did not operate within any jurisdiction.”

Rather than establishing US courts as a potential tribunal to enforce international norms, Roberts said, the first Congress passed the statute to avoid diplomatic repercussions.

“The United States was embarrassed by its potential inability to provide judicial relief to foreign officials injured in the United States,” he said. “Such offenses against ambassadors violated the law of nations, and if not adequately redressed could rise to an issue of war.”

“The ATS ensured that the United States could provide a forum for adjudicating such incidents,” Roberts said. “Nothing about this historical context suggests that Congress also intended federal common law under the ATS to provide a cause of action for conduct occurring in the territory of another sovereign.”

If the ATS applied broadly in other countries, Roberts said, it would imply that other countries could enforce its laws against US citizens for actions taken in the US or anywhere else in the world.

“The presumption against extraterritoriality guards against our courts triggering such serious foreign policy consequences, and instead defers such decisions, quite appropriately, to the political branches,” he said.

The case is Kiobel v. Royal Dutch Petroleum (10-1491).