Legal Commentary

Earlier this month, I blogged about the geographic reach of federal law and mentioned the Supreme Court's decision to hear an appeal involving a "foreign-cubed" securities class action in Morrison v. Nat'l Australia Bank, Ltd.  The term "foreign-cubed" refers to securities class actions in which the investors are foreign, the issuers are foreign, and the fraudulent conduct occurs abroad.  The post followed up on earlier ones focused on extraterritoriality and international law. 

Yesterday,  the Court heard arguments in the Morrison case and an overview of the arguments and the case can be found here. Commentary has started on various blogs, including this analysis at SCOTUSBlog and this post at Opinio Juris.  Analysis and previews of the oral argument were also provided yesterday at the WSJ Law Blog and at Law.com, among others.  The case is an important one and has generated, as one commentator describes it, "feverish interest."  Certainly other countries are interested.  As Lyle Denniston at SCOTUSBlog noted: the "hearing that seemed tailored for its international audience ? four members of the Canadian Supreme Court sat, raptly attentive, in the front spectators? row."  The London Times also ran an article commenting on how Britain was watching the case closely, and France, the UK, Northern Ireland and Australia, all filed amicus briefs in the case.

The case is potentially significant on the question of how readily courts should assume that American laws apply extraterritorially. Underlying the dispute is the question of what a court should do in the face of Congressional silence or at least ambiguity.  Also in play is the relevance of certain canons of statutory construction, such as the presumption against extraterritoriality.  The Court's questions (see some excerpts at Opinio Juris and in a Reuters piece) suggests the Court has grown skeptical about U.S. courts exerting extraterritorial jurisdiction and exporting its domestic laws worldwide.  It's a position that seems to be shared, for different reasons, by both the more conservative and more liberal members of the court.

Reembracing a more territorial approach (or, at least, a greater reluctance to assume that Congress has regulated extraterritorial conduct) is, to my mind, largely a positive development and one consistent with what Max Huffman and I argued in a recent amicus brief filed with the court, and in a number of prior law review articles (including here and here). Extraterritorial jurisdiction can be problematic.  Not only are extraterritorial laws inherently undemocratic (regulating foreigners, with no say in domestic political processes), but they also can retard and interfere with the creation of meaningful harmonized international, state-to-state agreements.  At minimum, as this case illustrates, they can lead to international discord and conflict.  Countries often retaliate, and broad extraterritorial applications of American law can lead to other countries applying their laws to Americans for their U.S.-based conduct.  That doesn't mean that courts should never interpret U.S. laws to regulate foreign conduct, but they should do so cautiously.  In a globalized world, territorial limits often are more, not less important, as way to reduce international conflict and reduce the problems created by overlapping jurisdiction. The Court is expected to have a ruling by the summer.  I'll try to post more later.