EXTRATERRITORIALITY (Update)

At the start of the twentieth century, both federal legislation and the U.S. Constitution were presumed to apply only within the territory of the United States. In the case of In re Ross (1891), the Supreme Court stated that "[t]he Constitution can have no operation in another country." And in American Banana Company v. United Fruit Company (1909), the Court refused to apply the sherman anti-trust act extraterritorially, declaring that "the general and almost universal rule is that the character of an act as lawful or unlawful must be determined wholly by the law of the country where the act is done." At the end of the twentieth century, however, federal statutes are frequently applied to both U.S. and foreign nationals outside the United States, although the protections of the bill of rights are not always afforded to foreign nationals abroad.

It is clear that Congress has constitutional authority to legislate extraterritorially, even if doing so violates international law (which it generally does not). The territorial reach of a statute is therefore a question of congressional intent. The Supreme Court sometimes assumes that Congress does not intend to regulate conduct outside the United States, applying the so-called presumption against extraterritoriality. For example, in Equal Employment Opportunity Commission v. Arabian American Oil Company (1991), the Court held that Title VII did not prohibit employment discrimination by an American company against an American citizen abroad. Because the presumption's principal modern justification is the notion that Congress is primarily concerned with domestic conditions, it should not be applied when foreign conduct affects domestic conditions. And in Hartford Fire Insurance v. California (1993), the Court ignored the presumption and held that the Sherman Antitrust Act applied to anticompetitive conduct by foreign companies that caused substantial, intended effects in the United States, overruling the specific holding of American Banana.

It is also clear that the Bill of Rights applies extraterritorially, but whether it applies to foreign nationals or only to U.S. nationals abroad depends on the theory one adopts. Under an "organic" theory, the Bill of Rights constrains the government wherever it acts. In reid v. covert (1957), a case involving a U.S. citizen overseas, Justice hugo l. black observed, "the United States is entirely a creature of the Constitution. Its power and authority have no other source. It can only act in accordance with all the limitations imposed by the Constitution." Under a "compact" theory, by contrast, the Constitution is viewed as a compact between the American people and their government that does not limit the government's treatment of foreign nationals.

In United States v. Verdugo-Urquídez (1990), the Court adopted a compact theory for the fourth amendment prohibition against unreasonable searches and seizures. The Court held that the Fourth Amendment did not apply to U.S. Drug Enforcement Administration agents searching the residences of a Mexican national in Mexico. Verdugo-Urquídez reasoned that because the text of the Fourth Amendment referred to the right of "the people" to be free from unreasonable searches and seizures, it applied only to U.S. citizens and to others who had established substantial, voluntary connections with the United States. Such reasoning implies, however, that other provisions of the Bill of Rights, like the first amendment guarantee of freedom of speech, the due process clause, and even the takings clause, which are not limited to "the people," may apply extraterritorially to U.S. and foreign nationals alike.

The due process clause may have particular relevance for the extraterritorial application of federal statutes. One interesting question is whether the extraterritorial application of U.S. law requires "significant contacts" such that its application is "neither arbitrary nor fundamentally unfair," as Allstate Insurance v. Hague (1981) required in the domestic, conflict-of-laws context. Another is whether Congress may constitutionally impose liability for conduct that is compelled by foreign law. The Court noted in Societé Internationale v. Rogers (1958) that dismissing the complaint of a party who could not comply with discovery orders because of Swiss bank secrecy laws would raise "serious constitutional questions" under the due process clause.

William S. Dodge
(2000)

Bibliography

Born, Gary B. 1992 A Reappraisal of the Extraterritorial Reach of U.S. Law. Law and Policy in International Business 24:1–100.

Brilmayer, Lea and Norchi, Charles 1992 Federal Extraterritoriality and Fifth Amendment Due Process. Harvard Law Review 105:1217–1263.

Dodge, William S. 1998 Understanding the Presumption Against Extraterritoriality. Berkeley Journal of International Law 16:85–125.

Kramer, Larry 1991 Vestiges of Beale: Extraterritorial Application of American Law. Supreme Court Review 1991:179–224.

Neuman, Gerald L. 1991 Whose Constitution? Yale Law Journal 100:909–991.