By Ed Pilkington

America's top human rights lawyers are gearing up for a crucial supreme court battle that will determine whether US-based and global corporations can be held liable for genocide and other violations of international law.

The hearing on 28 February is being seen as the most significant legal tussle over the status of corporations in the US since Citizens United, the highly controversial supreme court ruling that granted them the same first amendment rights as individuals. The case could herald a sea change in the responsibilities of the largest and most powerful companies in the world.

At stake in the Kiobel v Royal Dutch Petroleum case is the fundamental principle that corporations can be sued for civil wrongs in US civil courts just as any individual. The understanding flows from the Alien Tort Statute (ATS) that allows foreigners to bring civil actions in US courts for violations of international norms.

The Kiobel case involves a class action brought by the Ogoni people of southern Nigeria against the oil giant Shell. The complaint alleges that Shell conspired with the Nigerian government in the 1990s to commit human rights abuses such as extrajudicial killing, torture and rape against the Ogoni community in the oil-rich Niger Delta.

The complaint has been brought by several plaintiffs led by Esther Kiobel on behalf of her late husband Barinem Kiobel. He was one of the Ogoni Nine hanged by the Nigerian military dictatorship in 1995, among them the playwright and activist Ken Saro-Wiwa.

Since the first ATS case was brought against a major company in 1997 – against the oil company Unocal for human rights violations in Burma – it has been assumed that corporations are liable under the statute.

However, in September 2010 the second circuit US court of appeals in New York put a spanner in the works by ruling that corporations were not subject to its provisions. The court in effect provided corporations with immunity from legal actions for breaches of international law.

The ruling led to an outpouring of protest from lawyers and human rights groups who pointed out that though there have been relatively few ATS cases brought against corporations over the past 15 years, they have been hugely effective in improving business behaviour around the world. Compliance to the ATS has become standard across large companies.

Jennifer Green, a professor at the University of Minnesota law school who has helped draft a legal brief to the supreme court over the Kiobel case, said that ATS cases had had a significant ripple effect that has "improved the human rights practices of corporations. Though there are hurdles to plaintiffs bringing these cases, they address the most serious and universally accepted violations of international law."

Among the seminal actions brought under ATS have been several against corporations allegedly supporting the apartheid regime in South Africa; Holocaust suits that led to a settlement of more than $1bn against banks and German companies that used slave labour in the second world war; and an ongoing case against the technology multi-national Cisco Systems which is accused of designing software for the Chinese government to track and persecute members of the religious sect Falun Gong.

Marco Simons, legal director of Earth Rights International who litigated the Unocal case, said it would be deeply ironic were the supreme court to remove corporations from the threat of ATS lawsuits on grounds that they are not individuals. After all, the same supreme court, only two years ago, ruled that corporations were effectively individuals by granting them free speech rights in Citizens United.

"The fundamental question here is what responsibilities corporations bear in return for the rights that they enjoy. It would be terribly damaging were the supreme court to describe corporations as people when granting them benefits, as in Citizens United, but not when holding them to account for some of the most egregious violations of international law," Simons said.

The justices' decision, which is expected to be announced by June, cannot be second guessed. The nine members of the supreme court are divided by five to four, with the majority leaning towards a conservative bent.

The gravity of this month's Kiobel hearing is underlined by the plethora of eminent experts and institutions who have given their opinion on either side of the argument. The US government is siding with the petitioners who want to see corporations continue to be liable under international law.

Also siding with the petitioners are a raft of the world's top international law scholars, legal historians and the Nobel Laureate economist Joseph Stiglitz who argues in his brief to the supreme court that it is in America's self-interest to uphold stringent human rights standards among corporations.

On the other side of the fence, several of the world's largest multi-national companies including British Petroleum America, Chevron, Ford motor company and Rio Tinto have all waded in on Shell's behalf, mindful perhaps of their own self interests.