A Century of Changes in Extraterritoriality
November 30, 2022
This post is a lightly edited version of a talk given virtually on November 26, 2022, at the “International Symposium on Accelerating Changes Unseen in a Century and the Development of International Law” organized by the Chinese Academy of Social Sciences, Institute of International Law.
I am pleased to be with you today to discuss changes in the international law governing extraterritoriality during the past century. In many ways the international law of extraterritoriality has remained quite stable. But there have been significant changes, particularly in the areas of effects jurisdiction and universal jurisdiction. There has also been a trend toward viewing the traditional bases for jurisdiction to prescribe as reflecting a more general principle that requires a “genuine connection” with the regulating state. I am going to describe some of the changes in extraterritoriality over the past century and then discuss the implications of the “genuine connection” principle for sanctions and export controls.
First, it is important to be clear about what we mean when we talk about “extraterritoriality.” In the United States, “extraterritoriality” refers to the application of domestic law to persons, property, or conduct outside of the state’s own territory. The kind of jurisdiction that a state exercises in cases like this is called “jurisdiction to prescribe.” It is the authority to make—or to “prescribe”—law to govern persons, property, or conduct.
Jurisdiction to prescribe is distinct from other kinds of jurisdiction that a state may exercise. It is distinct from the jurisdiction of courts to apply law to decide a case, which is called “jurisdiction to adjudicate.” And it is distinct from the authority of a state to compel compliance with law by arresting a person or by seizing property, which is called “jurisdiction to enforce.”
The distinction among these different kinds of jurisdiction is important because international law applies different rules to different kinds of jurisdiction. Jurisdiction to enforce is strictly territorial. Under international law, one state may not seize a person or property within the territory of another state. Jurisdiction to prescribe is not territorial. International law recognizes the authority of a state to regulate on many bases other than territory, including effects, nationality, passive personality, the protective principle, and universal jurisdiction. Jurisdiction to adjudicate is not limited by customary international law at all except for certain international law rules of sovereign immunity. Instead, jurisdiction to adjudicate is governed by domestic rules of personal jurisdiction.
The rules of international law that govern jurisdiction are generally rules of customary international law. Customary international law depends on a general and consistent practice of states followed from a sense of legal obligation (opinio juris). So, we must examine state practice to see when states regulate extraterritorially and how other states respond. When we do, we see that customary international law on jurisdiction to prescribe has remained stable in some ways and has changed in other ways.
International Law in the Early Twentieth Century
What did customary international law on jurisdiction to prescribe look like a century ago? In 1927, the Permanent Court of International Justice decided the Lotus Case. It distinguished jurisdiction to prescribe and jurisdiction to adjudicate from jurisdiction to enforce. The court noted that, although jurisdiction to enforce was strictly territorial, jurisdiction to prescribe and jurisdiction to adjudicate were not. The court held that Turkey had jurisdiction to prescribe law for a French citizen on board a French ship based on the effects of his conduct on a Turkish ship.
During the late 1920s, the faculty of Harvard Law School organized research projects on international law with the hope of codifying some of its rules. The results of the project on Jurisdiction with Respect to Crime were published in the American Journal of International Law in 1935. The Harvard Research identified five principles of jurisdiction to prescribe with respect to criminal law: (1) the territorial principle, which included an effects principle; (2) the nationality principle based on the nationality of the offender; (3) the passive personality principle based on the nationality of the victim; (4) the protective principle covering crimes against the security, territorial integrity, or independence of the state; (5) the universality principle, which was generally limited to piracy.
Today, customary international law on jurisdiction to prescribe is similar. As reflected in the 2018 Restatement (Fourth) of U.S. Foreign Relations Law, customary international law recognizes six bases for jurisdiction to prescribe: territory, effects, nationality, passive personality, the protective principle, and universal jurisdiction. Effects jurisdiction is listed separately from territorial jurisdiction because of its increased used and acceptance. And universal jurisdiction has expanded beyond piracy to cover human rights and terrorism.
The Restatement also says that these bases for jurisdiction to prescribe are reflections of a more basic principle of “genuine connection.” Section 407 states: “Customary international law permits exercises of prescriptive jurisdiction if there is a genuine connection between the subject of the regulation and the state seeking to regulate. The genuine connection usually rests on a specific connection between the state and the subject being regulated, such as territory, effects, active personality, passive personality, or protection. In the case of universal jurisdiction, the genuine connection rests on the universal concern of states in suppressing certain offenses.”
I will briefly discuss the changes with effects jurisdiction and universal jurisdiction before turning to the principle of genuine connection. After World War II, the United States began to apply its antitrust law more aggressively to anticompetitive conduct outside the United States that caused harmful effects inside the United States. Although the Harvard Research recognized effects as a basis for jurisdiction to prescribe, its use with antitrust law was controversial because many European countries had policies encouraging cartels in some economic sectors. The disputes came to a head in the 1970s and 80s, when other countries filed formal protests and amicus briefs disputing effects jurisdiction and even enacted blocking statutes like the United Kingdom’s 1980 Protection of Trading Interests Act to block the enforcement of U.S. antitrust law.
But over time, other countries also adopted the effects principle with respect to their own competition laws. In 1988 the European Court of Justice held that EU competition law could be applied extraterritorially based on effects. And in 2008, China enacted its Anti-Monopoly Law, which “applies to monopolistic practices outside the mainland territory of the People’s Republic of China that eliminate or restrict competition in China’s domestic market.”
Universal jurisdiction is the jurisdiction to prescribe law with respect to certain offenses of universal concern even if no specific connection exists between the state and the persons or conduct being regulated.
Universal jurisdiction grew significantly after World War II in the areas of human rights and terrorism. International human rights law developed after the Nuremberg and Tokyo war crimes tribunals. Beginning in 1980, the United States interpreted an old law called the Alien Tort Statute to allow victims of human rights violations abroad to bring suit for damages in U.S. courts. Since 2013, the U.S. Supreme Court has limited universal jurisdiction under the Alien Tort Statute by requiring a connection to the United States. But the United States still exercises universal jurisdiction with respect to torture and extrajudicial killing under the Torture Victim Protection Act (TVPA).
Universal jurisdiction also grew for terrorism. In this area, the development of the law came through treaties. In 1970, the Convention for the Suppression of Unlawful Seizure of Aircraft was concluded. This convention required state parties to extradite or prosecute offenders found in their territory. The obligation to prosecute even when there is no other connection to the crime is an obligation to exercise universal jurisdiction. Other suppression conventions followed for other acts of terrorism, and there were also a few suppression conventions involving human rights like the 1984 Convention Against Torture.
Universal jurisdiction authorized by treaties is not necessarily state practice that supports a rule of customary international law. But when states passed laws to criminalizing terrorist acts and torture, they did not limit those laws to other treaty-parties. To the extent the laws apply to terrorist acts and torture with respect to non-treaty parties, they are state practice supporting universal jurisdiction.
Another development has been to treat each of the specific bases for jurisdiction to prescribe as examples of a larger principle—the principle is that a state may regulate only if it has a genuine connection to the subject of the regulation. This idea goes back at least 30 years.
The principle of requiring a genuine connection can limit the extraterritorial application of law in some cases. In 2018, the CFO of Huawei, Meng Wanzhou was indicted in the United States for bank fraud, and the United States later sought her extradition from Canada. The indictment was based on a meeting Ms. Meng had in Hong Kong with non-U.S. banks. Although the United States might have claimed effects jurisdiction because the meeting caused U.S. banks to continue doing business with Huawei, in my view the connection to the United States was too weak to constitute a genuine connection. During the extradition proceeding, I filed an affidavit with the Canadian court saying that the U.S. prosecution violated international law.
Sanctions and Export Controls
The principle of genuine connection may also have some application to sanctions and export controls. U.S. sanctions on Iran have prohibited the export of goods and services from the United States to Iran. This is supported by the territorial principle. These sanctions also prohibit U.S. companies abroad and foreign companies controlled by U.S. companies from exporting goods and services to Iran. The prohibition on U.S. companies is supported by the nationality principle, but the prohibition on foreign companies controlled by U.S. companies is not. Customary international law generally attributes nationality based on the state of incorporation or principal place of business, not based on control. U.S. secondary sanctions that deny access to the U.S. market to foreign companies that sell goods or services to Iran are also supported by the territorial principle. International law does not require countries to provide access to their markets. But the sanctions that prohibit foreign banks from processing payments involving Iran because most dollar transactions are cleared through New York probably goes too far. Although there is technically a territorial connection with the United States, this does not, in my view, establish a genuine connection when both the parties are foreign and the transaction does not otherwise touch the United States.
The new U.S. export controls on advanced computer and semiconductor exports to China also raise questions under the international law of prescriptive jurisdiction. These rules, published on October 7, prohibit the export from the United States to China of certain semiconductors and equipment for making semiconductors. This is supported by the territorial principle. These rules also prohibit U.S. persons from providing support to certain semiconductor manufacturing in China. This is supported by the nationality principle. Finally, these rules prohibit the export to China of goods made outside the United States using U.S. origin technology. None of the traditional bases for prescriptive jurisdiction support this rule. But if the fundamental rule for prescriptive jurisdiction is that a state must have a genuine connection, then the question we must ask is whether the U.S. origin of technology creates such a genuine connection.
This is an open question. So far as I know, the United States is the only country that regulates extraterritorially based on the origin of technology. But it remains to be seen how many states will protest this exercise of jurisdiction. In the 1980s, by comparison, many countries protested U.S. attempts to regulate the exports of foreign companies that were controlled by U.S. companies.
International Law Evolves
The customary international law of prescriptive jurisdiction will continue to evolve in the 21st century. Nations will continue to apply their laws extraterritorially on some established bases of jurisdiction like territory, effects, and nationality. But they may also assert jurisdiction to prescribe based on new connections like the origin of technology. The development of customary international law depends not only on whether nations exercise jurisdiction on new bases but also on how other nations react to such exercises of jurisdiction. Will they object, or will they acquiesce without protest? Only time will tell.