Chapter 1. Jurisdiction to Prescribe

Subchapter A. Principles of Jurisdiction to Prescribe

 

Copyright (c) 1987 The American Law Institute

 

INTRODUCTORY NOTE

 

International law has long recognized limitations on the authority of states to exercise jurisdiction to prescribe in circumstances affecting the interests of other states. In the past, the jurisdiction of a state to make its law applicable in a transnational context was determined by formal criteria supposedly derived from concepts of state sovereignty and power. In principle, it was accepted that a state had jurisdiction to exercise its authority within its territory and with respect to its nationals abroad. Ambiguous cases were seen as raising issues in the definition and application of those principles, e.g., whether an activity was within a state's "territorial jurisdiction" when only part of the act took place in its territory; whether territorial jurisdiction extended to an act committed elsewhere that had "effect," or a particular kind of effect, within the territory; whether a state's jurisdiction based on nationality included authority to regulate activities abroad of foreign companies in which the state's nationals owned x per cent of the shares. These formal criteria, moreover, were seen as independent and on equal footing. The same act might be regulated by the territorial state as well as by the state of the actor's nationality, or by two states claiming territorial jurisdiction, or by two states claiming jurisdiction based on nationality. If the regulation of two (or more) states conflicted, that was unfortunate for the actor caught between two masters, but international law, it was thought, offered neither resolution nor remedy.

Increasingly, the practice of states has reflected conceptions better adapted to the complexities of contemporary international intercourse. State sovereignty was to be controlled by law, and its power tempered by reason and reasonableness. States have not in fact regulated all the foreign activities of their nationals (or affiliates of their nationals), nor every activity that could be said to have some effect in their territory. Attempts by some states-- notably the United States--to apply their law on the basis of very broad conceptions of territoriality or nationality bred resentment and brought forth conflicting assertions of the rules of international law. Relations with Canada, and also with several states in Western Europe, have at times been strained by efforts of the United States to implement economic sanctions-- against China, the Soviet Union, Cuba, and other states--through restraints on foreign subsidiaries of corporations based in the United States. See s 414, Reporters' Notes 3 and 8. Efforts by United States regulatory agencies such as the Federal Maritime Commission and the Civil Aeronautics Board to exercise jurisdiction over international transport conferences, particularly to secure information from conference members located abroad, have provoked resistance in the form of blocking legislation from many important trading partners and allies of the United States. See s 442, Reporters' Notes 1 and 4. The application of antitrust and securities laws, on both governmental and private initiative, has reached beyond the territorial frontiers of the United States, and from time to time has been perceived by other states as intrusion into their rightful domain. See ss 415 and 416. Partly in response to the reactions of other states, the United States has modified its assertions of jurisdiction in some areas. See, e.g., s 415, Comment b and Reporters' Notes 7 and 8.

These situations involve conflicting assertions, express or implied, of rules of international law as to jurisdiction to prescribe. United States courts have considered those rules, and interpreted the known or presumed intent of Congress, in the light of changing understandings. See, e.g., s 415, Reporters' Note 4, s 416, Reporters' Note 1. Courts in other countries, and the Court of Justice of the European Communities, have also considered the rules, sometimes in construing the reach of the legislation of their own states, or the Community, sometimes in considering the reach of United States law. See, e.g., s 415, Reporters' Note 9. Inevitably, the rules themselves have changed, reflecting transformations in global communications, in the level and variety of transnational activity, and in perceptions of the way states interact with one another. [FNa.] In a number of contexts the question of jurisdiction to prescribe resembles questions traditionally explored under the heading of conflict of laws or private international law. This chapter, however, concentrates on so-called public law--tax, antitrust, securities regulation, labor law, and similar legislation. The issues addressed may arise in private litigation, but the rules stated in this chapter do not necessarily apply to controversies unrelated to public law issues. Some other issues often discussed in the framework of international conflict of laws are addressed in other chapters of this part, e.g., Chapters 2 and 8.

Territoriality and nationality remain the principal bases of jurisdiction to prescribe, but in determining their meaning rigid concepts have been replaced by broader criteria embracing principles of reasonableness and fairness to accommodate overlapping or conflicting interests of states, and affected private interests. Courts and other decision makers, learning from the approach to comparable problems in private international law, are increasingly inclined to consider various interests, examine contacts and links, give effect to justified expectations, search for the "center of gravity" of a given situation, and develop priorities. This Restatement follows this approach in adopting the principle of reasonableness.

 

FNa. See, generally, Lowenfeld, "Public Law in the International Arena: Conflict of Laws, International Law, and Some Suggestions for Their Interaction," 163 Hague Academy, Recueil des Cours 311 (1979).