4.4 Extraterritoriality – protective jurisdiction and the ‘effects doctrine’
The second part of the Lotus judgment would appear not to require a nexus between the state and the exercise of prescriptive jurisdiction outside the state – subject only to the existence of any rules of international law prohibiting it. In practice, states asserting extraterritorial jurisdiction usually have some connection with the person or events over which they are claiming jurisdiction. As you saw earlier, both nationality and territoriality jurisdiction allow the state on certain occasions to assert extraterritorial jurisdiction over acts that take place outside the territory of the state and over the activities of non-nationals. In recent years many states, most notably the USA, have used the ‘effects doctrine’ to claim jurisdiction over matters that have an effect, however distant in their territory.
The use of extraterritorial jurisdiction has the potential to cause international tension. The discord created is aptly illustrated by the extraterritorial impact of US anti-competition legislation that encompasses foreign cartels, formed in many cases with the express approval of national governments of the corporations concerned. These cartels have no direct connection with the USA, but have been considered as indirectly connected, as their existence and operation affect world prices and therefore affect the USA. This was regarded by many in Europe as aggressive promotion of the USA’s economic interests. The EU and European states responded by enacting ‘blocking’ legislation.
Globalisation poses challenges to the effectiveness of territorially based jurisdiction and states recognise that, on occasion, effective regulation of activities within their territories demands a degree of control over private activities beyond their borders. When used cooperatively extraterritorial jurisdiction has the potential to fill certain regulatory and accountability gaps. For instance, there is growing acceptance of the need for an increased regulation of transnational businesses. Extraterritoriality has been used for the control of bribery; the US Foreign Corrupt Practices Act 1977 and the UK Bribery Act 2010 both have extraterritorial reach. Its use has been promulgated by John Ruggie, UN SRSG in the UN’s ‘Protect, Respect and Remedy’ Framework (UN, 2011) as a means of increasing the accountability of MNCs for their activities in the developing world.
States are also increasingly prepared to use extraterritorial jurisdiction in relation to criminal activity which has international reach, such as terrorism, money laundering, corruption, grave human rights breaches and human trafficking.
In conclusion, the customary international law principles of jurisdiction are complex and at times controversial in their application, as they are evolving and adapting to a world where individuals and corporations increasingly act and produce effects across state borders.