I hypothesize that U.S. federal courts are substantially more likely to find a basis
for subject matter jurisdiction when the conduct at issue threatens to undermine or impair
the operation of federal regulatory rules at the domestic level than when it does not. This
is expected to hold for both statutes with a track record of extraterritorial application, as
well as for unprecedented instances of extraterritorial regulation under a given statute.
Even where it is clear from either statutory text or prior precedent that a particular law
may apply extraterritorially, a court must nevertheless decide whether the law may be
reasonably applied to the facts of the case before it. For example, Congress
unquestionably intended the Foreign Corrupt Practices Act (FCPA) to apply to conduct
outside the United States. In individual disputes invoking the FCPA, however, a court
must still determine whether the conduct under scrutiny falls within the statute’s
definition of ‘corrupt practices’ in order to justify extraterritorial regulation.
U.S. federal courts have formally relied upon two types of tests to determine
whether extraterritorial subject matter jurisdiction is appropriate. The first asks whether
the dispute involves conduct inside the United States, and the second, whether the
extraterritorial conduct at issue caused any negative effects upon U.S. territory or to U.S.
interests. These tests share a common inadequacy: the absence an external standard by
which to make an ex ante determination of sufficiency. Under some statutes in some
circuits, a showing of clear harm inside the United States from extraterritorial conduct
has been considered inadequate for jurisdiction. Under other statutes, however, merely
showing intent to harm U.S. territory or interests is sufficient to give a court subject
The sufficiency thresholds for conduct on U.S. territory vary
similarly.
Deciding who must play by U.S. rules
A separate inquiry under the strictures of constitutional due process is required to
decide whether a U.S. court has jurisdiction over the ‘person’ of a prospective defendant.
(Borchers 1998:1166-73).
When a U.S. court determines that personal jurisdiction is
proper in a transnational dispute, it is deciding that the defendant should be held to U.S.
19
Claims involving restraints on trade and criminal statutes aimed at narcotics trafficking are examples of
the later type.
20
When an actor violates the rules of the political community, it can (1) “close ranks” and define the
transgressor and the transgression as an “external threat,” or (2) “claim dominion over the transgression by
conceptualizing the transgressor as a member of the community who committed what might be considered
an internal offense.” Whether a threat is defined as internal or external to the sanctioning community a
question of jurisdiction (Berman 2002:432).
9
Convention