EXTRA-TERRITORIAL APPLICATION
OF UNITED STATES LAW
Paul B. Klaas
Partner-in-charge (International)
Dorsey & Whitney LLP
Minneapolis / London
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Microsoft v. ATT (U.S. Sup. Ct. 2007)
“There is a presumption that United States
law governs domestically but does not rule
the world.”
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SOME US LAWS WITH
EXTRA-TERRITORIAL APPLICATION
Antitrust Laws
Securities Fraud Laws
Foreign Corrupt Practices Act
Export Administration Regulations
Cuban Asset Control Regulations
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US ANTITRUST LAWS
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Sherman Act (1890)
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Sherman Act
Section 1: Restraint of Trade
Section 2: Monopolization
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Clayton Act (1914)
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Clayton Act
Price discrimination
Tying
M&A
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“Effects Test”
US courts have jurisdiction over the conduct
of foreign corporations where that conduct
was intended to, and actually did, affect US
commerce
US v. Alcoa (2d Cir. 1945)
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Foreign Trade Antitrust
Improvements Act
(“FTAIA”) (1982)
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FTAIA
US antitrust laws apply if:
1) The conduct has a “direct, substantial, and
reasonably forseeable effect” on US domestic
commerce, imports into the US, or US exporters,
and
2) The conduct “gives rise to a claim under the
provisions of the [US antitrust laws]”
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Statoil v. Heeremac (5th Cir. 2001)
Global conspiracy among barge owners caused
American consumers to pay “supracompetitive
prices for oil”
But, the global conspiracy did not “give rise to an
[antitrust] claim” by Statoil
So, US antitrust laws do not apply
Case dismissed
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Comity
Timberlane Lumber Co. v. Bank of America
(9th Cir. 1976)
US federal courts should balance “effects” on the
United States of anticompetitive conduct in foreign
countries against “the degree of conflict with
foreign law or policy” before finding that US
antitrust laws apply
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US SECURITIES LAWS
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US SECURITIES LAWS
Securities Act of 1933
– Section 5: requires that corporations register with
SEC if wish to sell securities in the US
Securities Act of 1934
– Section 10(b)(5): forbids “untrue statement of a
material fact”
Public Company Accounting Reform and
Investor Protection Act of 2002
– the “Sarbanes-Oxley Act”
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Sarbanes-Oxley Act of 2002
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Sarbanes-Oxley Act
Increased disclosure requirements for public
companies
Corporate executives personally responsible for
financial information reported to SEC
Increased SEC enforcement powers and penalties
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Effects and/or Conduct
In determining whether US securities laws apply,
US courts will apply:
An “effects test” and
A “conduct test”
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Foreign³ [foreign-cubed cases]
“1) foreign plaintiffs suing,
2) a foreign issuer in an American court for
violations of American securities laws based on
securities transactions in
3) foreign countries.”
Morrison v. National Australia Bank Ltd.
(2d Cir. 2008) (certiorari accepted by US Sup. Ct.)
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Morrison v. National Australia Bank Ltd.
(2d Cir. 2008)
Q. “What conduct comprises the heart of the
alleged fraud?”
A. The fraudulent statements made at NAB
headquarters in Australia, not the falsified
numbers calculated in US
No jurisdiction in US federal court
Case dismissed
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Foreign Corrupt Practices Act
(“FCPA”)
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FCPA
A “covered person”
may not make a prohibited payment or offer
to a “foreign official”
with corrupt intent.
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FCPA
“Covered person” includes, for example:
– US citizens
– US corporations
– Foreign subsidiaries of US corporations
– Foreign corporations who are “issuers”
registered with the SEC
– Anyone acting in the US
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FCPA
“Prohibited payments or offers” include, for
example:
– Cash
– Paid travel expenses
– Free upgrades of airplane seats
– Requested donations to charities
– “Anything of value”
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FCPA
“Foreign official” includes, for example:
– Government officials
– Employees of state-owned or controlled
entities
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FCPA
“Corrupt intent” includes, for example:
– Influencing any act or decision, or
– Securing any improper advantage, or
– Inducing the foreign official to use his
influence
– To obtain or retain business
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Lanny Breuer
Assistant Attorney General of the United States
(Criminal Division)
November 12, 2009
“Our focus and resolve in the FCPA area will not
decrease, and we will be intensely focused on rooting out
foreign bribery in your industry. That will mean
investigation and, if warranted, prosecution of
corporations to be sure, but also investigation and
prosecution of senior executives. Effective deterrence
requires no less. Indeed, we firmly believe that for our
enforcement efforts to have real deterrent effect, culpable
individuals must be prosecuted and go to jail…”
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EXPORT ADMINISTRATION
REGULATIONS
(“EAR”)
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Export Administration Regulations
(“EAR”)
Targets “dual use” items -- items that can have
commercial or military uses
Items can be commodities, technology, software…
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EAR
US Department of Commerce license is required, if:
1) the item is “in the United States” or is
“U.S. origin,”
2) the item is on the Commerce Control List
(15 C.F.R. pt 774), and
3) the item is being exported or re-exported to a
country on the Country Chart (15 C.F.R. 738)
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EAR
“Re-export” includes:
– Transfer of U.S. origin items from one foreign
country to another
– Transfer of technology or software to a foreign
national outside of the US (e.g., delivery, oral
briefing, visual inspection)
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CUBAN ASSET
CONTROL REGULATION
(“CACR”)
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Cuban Asset Control Regulation
(“CACR”)
CACR bars US citizens or entities
from transacting business with Cuba
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CACR applies to:
All US citizens
All US permanent residents
All individuals and organizations physically in the US
All branches and subsidiaries of US organizations
throughout the world
– US Office of Foreign Assets Control
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Nyheter
Cuba fordømmer norsk hotellnekt
Scandic Edderkoppens amerikanske eiere vil ikke ha kubanske gjester.
Foto: Espen Braata /Scanpix
Kubanske myndigheter beskylder Norge for å bøye seg for amerikansk press etter at en kubansk delegasjon ble
nektet å ta inn på et amerikanskeid hotell i Oslo.
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Helms-Burton Act (the “Libertad” Act)
(1996)
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Helms-Burton Act
Title III: “Protection of Property Rights of
US Nationals”
– US nationals who had property expropriated by the
Cuban government can sue anyone who “traffics” in
such property, including non-US individuals and
entities (suspended)
Title IV: “Exclusion of Certain Aliens”
– “Traffickers” (including corporate executives) can be
denied entrance to the US
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Canadian Response to the
US Helms-Burton Act
The Godfrey-Milliken Bill (Canada, 1996)
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Godfrey-Milliken Bill
Persons loyal to England who fled the US in 1776
and became Canadians may reclaim land
confiscated by American revolutionary courts
Americans who “traffic” in property confiscated
from loyalists shall be barred from Canada
(The bill was not passed by the Canadian Parliament)
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