Thursday, August 5, 2010

Extraterritoriality in flux?

In a just-published ASIL Insight, our colleague Paul B. Stephan sees more than securities laws at stake in the recent U.S. Supreme Court trimming of extraterritoriality.
Stephan, both the John C. Jeffries, Jr., Distinguished Professor of Law and the Elizabeth D. and Richard A. Merrill Professor of Law at the University of Virginia, deftly detailed Justice Antonin Scalia's opinion for the 5-member majority in Morrison v. National Australia Bank Limited (June 24, 2010). (credit for below left photo) Other thought-provoking discussions of this decision were posted here, here, here, and here at Opinio Juris.
In Morrison, the Court affirmed dismissal of a lawsuit alleging civil fraud in violation of § 10(b) of the Securities and Exchange Act of 1934 and its implementing Rule 10b-5. The suit, to quote Stephan's Insight, "involved only foreign plaintiffs, securities issed by a foreign company, and transactions in those securities that took place exclusively in a foreign country." Scalia's opinion underscored that there is a presumption against extraterritoriality, one that requires "Congress to clearly indicate when it wanted its rules to apply to foreign conduct."
Stephan termed the decision "a firm and unambiguous rebuke" of the tendency by some lower courts to give securities laws greater extraterritorial reach. That pronouncement pretermits the contrary viewpoints of the 3 remaining Justices (Sonia Sotomayor did not participate): Stephen G. Breyer, in a separate opinion that suggested the suit yet might go forward under other federal statutes, concurred only in part, while John Paul Stevens and Ruth Bader Ginsburg concurred only in the judgment and not at in the majority's reasoning; indeed, their joint opinion opened with the declaration that they
would adhere to the general approach that has been the law in the Second Circuit, and most of the rest of the country, for nearly four decades.
Nonetheless, the pronouncement is accurate as a matter of counting current Court noses.
As interesting as the description of the judgment is Stephan's additional observation. He rightly wrote that
one must wonder what Morrison implies about other statutes.
Particularly noted is the means by which noncitizen plaintiffs have sought relief in U.S. federal courts for torts committed in violation of the law of nations or U.S. treaties. That means, of course, is Alien Tort Statute (prior IntLawGrrls posts). Alien Tort cases have involved events in all corners of the earth. "The Justice Department in several briefs has argued that the presumption against extraterritoriality applies to this statute," Stephan wrote (citing this 1 U.S. amicus brief, which dates from the 2d term of President George W. Bush). The Insight adds that "[s]cholarly support exists" for such a position. All may be tested soon: Stephan noted that the question's presented in Talisman Energy (photo credit), an Alien Tort case involving the oil field in Sudan, which the Supreme Court has been asked to review.
Another thought jumps to mind:
Any chance that a Court cutback campaign might reach to a sector in which extraterritoriality has grown steadily, with judicial approval, in the years of the so-called wars on drugs and terror? That is, to extraterritorial criminal jurisdiction?

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