actors and institutions. Sub-state actors (e.g. courts, executive agencies) and private
entities are the main protagonists in this account. The second concerns the logic by
which outcomes are generated. The causal story developed here emphasizes domestic-
level institutional mandates and preferences in accounting for regulatory outcomes,
although these may be tempered by systemic-level inputs. These mandates and
preferences differ from those specified in dominant IR paradigms, as well as from most
aggregate level definitions of the ‘national interest’. The third difference relates to the
types of outcomes produced. Whereas the goal of most peak-level bargaining is a
promise of future behavior in accordance with an agreed policy, the result of judicial
resolutions of regulatory disputes is the articulation and application of a legal rule. To
the degree that these two types of outcomes may have different behavioral consequences
for public and private actors, distinguishing between them is analytically important.
The disputes examined in this research occur at the interface between domestic
law and international relations.
To explain the choice of U.S. courts to regulate
extraterritorially (or not), I look to their responsibilities and capacities at the domestic
level, together with constraints upon, and opportunities for, fulfilling courts’ institutional
mandates present in the wider international political and legal environment. This
research finds that courts choose to regulate extraterritorially primarily on the basis of
anticipated threats to the future operation of domestic-level regulatory rules and
structures.
I distinguish two types of ‘threat’ to the domestic regulatory order. The first
concerns extraterritorial conduct that threatens the future integrity of domestic regulatory
rules and institutions. Ex ante estimation of potential harm from extraterritorial conduct
involves considering (1) whether the conduct produces costs (negative externalities)
inside the United States, and (2) whether it is likely to continue, or increase, in the
absence of regulatory action by the court. If private actors are allowed to the capture the
benefits of behavior that violates U.S. domestic law (e.g. forming a trade cartel or
engaging in insider trading in securities transactions) simply by leaving U.S. territory, it
will create incentives for others to follow suit. The foreseeable consequence is a
4
For a discussion of the relationship between policy legitimacy and the ‘rule of law’ see e.g. Friederich A.
Hayek, The Constitution of Liberty (1960) pp. 153-154. On the distinction between ‘political’ and ‘legal’
legitimacy, see Ferejohn and Kramer (2002:1039).
5
The constitutional prohibition against issuing advisory opinions restricts judicial power to deciding actual
‘cases or controversies’ between parties under the law, Article III, §2.
4
Convention