Evading legislative jurisdiction.

• Author: Parrish, Austen L.

In the last few years, and mostly unnoticed, courts have adopted a different approach to issues of legislative jurisdiction. Instead of grappling with the difficult question of whether Congress intended a law to reach beyond U.S. borders, some courts have side-stepped it entirely. Courts have done so by redefining extraterritoriality. Significant and contentious decisions in the Ninth and D.C. Circuits paved the way by holding that not all regulation of overseas foreign conduct is extraterritorial. And then suddenly, in 2010, the U.S. Supreme Court may have unintentionally breathed life into the practice. In its landmark Morrison v. National Australia Bank decision, the Court suggested that legislation focused on domestic conditions may not be extraterritorial, even if the legislation regulates overseas foreign activity.

This Essay laments the birth of this troubling new approach, where established law is jettisoned and legislative jurisdiction analysis is evaded. The Essay's aim is largely descriptive: it summarizes an important development and reveals how courts have lapsed into error. But it goes beyond the descriptive to also critique the new practice. Redefining extraterritoriality not only subverts established doctrine, it removes an important safeguard to the difficulties that extraterritorial regulation creates. More problematically, the practice undercuts principles that have been foundational in both domestic and international law.

INTRODUCTION

At one time, the fundamentals of the law of legislative jurisdiction were mostly settled. As a general matter, the law shielded each state from the intrusion of others, ensuring that each could pursue its own economic and social objectives. Extraterritorial regulation--the regulation of foreign conduct outside the United States--although tolerated under certain circumstances, was disfavored and in tension with basic international law principles. To be sure, significant and vigorous debate existed at the margins over the extent to which constitutional provisions constrained congressional action and over how courts should interpret a statute's geographic reach in the face of congressional silence. But while those debates played out at the periphery, the core doctrine remained untouched. (1) Even when globalization rendered territorial limits to law less important as a descriptive matter, the heart of the doctrinal analysis remained intact. Absent contrary evidence, Congress was presumed to have exercised only its territorial jurisdiction.

What once was set, however, has softened. In the last few years, and largely unnoticed, courts have taken a different tack. Instead of wrestling with the difficult questions of whether Congress intended a law to apply to foreign conduct and, if so, whether doing so is constitutional or consistent with international law, some courts have sidestepped the issue of legislative jurisdiction entirely. They have done so by redefining extraterritoriality itself. Significant decisions in the Ninth and the D.C. Circuits paved the way by holding that not all regulation of overseas foreign conduct is extraterritorial. (2) And then in 2010, perhaps unintentionally, the U.S. Supreme Court seemed to breathe life into the practice. The Court suggested that legislation "focus[ed]" on domestic conditions is not extraterritorial, even if the legislation regulates foreign activity. (3)

This Essay laments the birth of this troubling new approach. Unlike a number of recent articles that have sought to develop comprehensive frameworks for addressing extraterritorial regulation (4) or to refashion this area of law, (5) the Essay's goal is more modest. It seeks to limn an important development and reveal how courts have lapsed into error. In so doing, it also aims to clear away some of the confusion that has festered in the lower courts. Part I summarizes the law of legislative jurisdiction and the doctrinal principles that courts use to determine whether Congress intended to regulate conduct occurring outside U.S. borders. Part II then describes how courts have circumvented doctrine through redefining extraterritoriality. Part II ends with a critique of this new practice and explains why redefining extraterritoriality obscures an already difficult analysis. Finally, in Part III, the Essay suggests that a return to well-established law would correct some of the excesses of transnational litigation. It explains why redefining extraterritoriality to evade legislative jurisdiction analysis not only subverts the territorial principle, but removes an important safeguard to the problems that extraterritorial regulation engenders. More problematically, the redefinition marks a sharp departure from foundational principles that have defined the international legal system. It is a departure that, if embraced, threatens to increase global conflict, frustrate multilateralism, and undermine American interests.

A point to stress before proceeding: the doctrinal sleight of hand where courts avoid the thorny issues surrounding legislative jurisdiction is not merely of academic concern. The extension of federal law to activity outside the United States has dramatically increased in the last decade and promises to continue. (6) The way courts approach legislative jurisdiction determines, in part, how quickly these sorts of transnational cases will multiply. Indicative of the trend, legislative jurisdiction cases have become a common fixture on the Supreme Court's docket. (7) Not surprisingly, as the world flattens, and people and markets become more interconnected, (8) courts are pressed to provide a forum for malfeasance wherever it occurs. (9) Legislative jurisdiction analysis, however, has a broader significance. It is the doctrinal plane upon which ongoing and significant debates are waged: the importance of national courts in global governance, (10) the role that territoriality should play in law, (11) as well as the extent to which domestic law, as contrasted with international law, should address transnational challenges. (12) For these reasons, it serves as a cornerstone for a distinct field of law. (13)

1. WELL-ESTABLISHED DOCTRINE?

   Legislative jurisdiction refers to Congress's authority to prescribe or regulate conduct. (14) Congress's power to apply its law to occurrences in the United States, within constitutional limits, is uncontested. (15) Legislative jurisdiction comes into play when a state attempts to apply its law to the foreign acts of non-nationals. When the United States attempts to formally project its laws outside U.S. borders, issues of extraterritoriality come to the fore. While some of these issues are the subject of spirited debate, many of the precepts are settled.

   1. Extraterritoriality Defined

      One of the long-settled precepts is the definition of "extraterritoriality." Both courts and commentators refer to extraterritorial legislation the same way: domestic law that regulates conduct abroad. (16) For the U.S. Supreme Court, territorial jurisdiction involves "places over which the United States has sovereignty or has some measure of legislative control." (17) In a similar vein, Black's Law Dictionary defines 'Jurisdiction" as "[a] government's general power to exercise authority over all persons and things within its territory," while it defines "extraterritorial jurisdiction" as "a court's ability to exercise power beyond its territorial limits." (18) This is not to say that extraterritorial regulation is forbidden or necessarily even of dubious legality. On the contrary, international law permits states to regulate overseas conduct in a number of contexts, such as regulating the conduct of its own citizens. (19) But when Congress uses a basis of jurisdiction other than territorial jurisdiction, Congress has regulated extraterritorially.

      This understanding--that extraterritoriality is implicated whenever a state exercises jurisdiction on a basis other than territorial jurisdiction--is consistent with the doctrine's historical underpinnings. Limiting a state's regulatory authority to activities within its borders was at one time beyond dispute. In the personal jurisdiction, choice of law, and international law contexts, rules had territorial limits. (20) As Justice Story famously declared, "every nation possesses an exclusive sovereignty and jurisdiction within its own territory," and "it would be wholly incompatible with equality and exclusiveness of the sovereignty of all nations, that any one nation should be at liberty to regulate either persons or things not within its own territory." (21) Beale summarized the universally agreed upon rule the same way: "Since the power of a state is supreme within its own territory, no other state can exercise power there.... It follows generally that no statute has force to affect any person, thing, or act, outside the territory of the state that passed it." (22) These understandings were widely held. (23) And even when strict territorial approaches eventually gave way in other areas of the law, (24) states were still cautious about extending law beyond the water's edge. Congress would be presumed to usually regulate only activity in U.S. territory or under American control.

      A limited exception to the notion that foreign conduct was beyond a state's territorial jurisdiction was known as the "objective" application of the territorial principle. In situations where a crime's effects were so much part of the act that produced them "that their separation [would render] the offense non-existent," courts found territorial jurisdiction implicated even though the conduct that commenced the crime occurred abroad. (25) Simply that a crime's effects were felt within a state, however, was insufficient. Rather, jurisdiction existed only when the crime's nature meant that the crime was consummated in the place where the direct effect of the criminal act took place (i.e., when those effects were a...