Extraterritoriality is a legal term which refers to extending a home country’s jurisdiction to citizens, businessmen, diplomats and ambassadors in a foreign country. Simply put, it means that laws may be extended to people, businesses, and assets which are not physically located in the home country.
More on Extraterritoriality
The Extraterritoriality Principle refers to the country’s authority that extends beyond its national boundaries. Extraterritoriality extends to vessels, assets, citizen and other professionals. Diplomats and ambassadors are exempted from domestic law, including: prosecution in local courts, arrest by police officers for offenses in foreign country, and they may be exempted from local tax laws. However, in some cases such as piracy, terrorism, human trafficking, and genocides etc., any country can punish criminals for their crimes.
What Are Some Examples of Extraterritoriality?
- Diplomatic missions – Diplomats and ambassadors enjoy immunity and privileges in the foreign country of their service. These privileges and immunities are provided for by the Vienna Convention on Diplomatic Relations and the Vienna Convention on Consular Relations. Diplomats and ambassadors cannot face trail by the domestic country’s court. Further, police arrest them (except in rare circumstances). Generally, lower level staff of diplomatic missions does not have these privileges. Therefore, the home country can extend its jurisdiction to them on the basis of extraterritoriality principle.
- Military forces – Military forces that are deployed and stationed under UN umbrella in foreign countries to maintain peace and stability are also exempted from the local law where they are stationed. Under the extraterritoriality principle, the home country of the military force could exercise their jurisdiction while the force is deployed.
- Criminal law – Criminal laws may be exercised on the basis of extraterritoriality. Instead of foreign countries, many countries prefer to prosecute and try their citizens under their domestic law. They often do not trust judges and courts of other countries. They fear that defendants may not be provided ample opportunities to prove their innocence.
Position within the United Nation (UN)
UN officials, members, and delegations enjoy a broad range of immunities and privileges, including fiscal, criminal and other immunities. These privileges and immunities are covered by the Convention on the Privileges and Immunities of the United Nations, adopted by the General Assembly in 1946.
References for Extraterritoriality
Academic Research on Extraterritoriality
- ● The dangerous extraterritoriality of American securities law, Choi, S. J., & Guzman, A. T. (1996). Nw. J. Int’l L. & Bus., 17, 207. This paper analyses the stock markets under the United States. Emphasis is placed on the extraterritorial legislation set up by this government to protect their citizens trading stocks outside the country. This paper analyses the effect of this legislation on other nations, and look at possible ways in which these regulations might overthrow the domestic trading regulations of other nations, especially the ones with American traders. The main aim of this study, is to show how the United States might be imposing its own domestic laws on other nations in the name of safeguarding their citizens.
- ● Extraterritorial application of antitrust and securities laws: An inquiry into the utility of a choice-of-law approach, Weintraub, R. J. (1991). Tex. L. Rev., 70, 1799.
- ● Extraterritoriality in an Era of Internationalization of the Securities Markets: The Need to Revisit Domestic Policies, Thomas, B. S. (1982). Rutgers L. Rev., 35, 453. This paper analyses the increase in the rate of foreign investments by international investors in the securities market, and the beliefs that led to this increase. It focuses on the profits and risks of foreign investments.
- ● Extraterritoriality in the Federal Securities Code, Loss, L. (1979). Harv. Int’l. LJ, 20, 305.
- ● Extraterritorial Regulation of Foreign Business under the US Securities Laws, The, Hacker, R. C., & Rotunda, R. D. (1980). NCL Rev., 59, 643. In this paper, the authors analyses the extraterritorial applicability of the US securities law. They further analyse the extraterritorial application of the 1934 Act antifraud provisions. They provide different conclusions on these studies.
- ● Recent Developments in the Extraterritorial Application of Section 10 (b) of the Securities and Exchange Act of 1934, Mizrack, R. (1974). Bus. Law., 30, 367. This paper analyses the development in extraterritorial application of the section 10b of the Exchange Act of 1934, after its first application in 1960, twenty-five years after its enactment.
- ● Extraterritorial Jurisdiction of US Antitrust and Securities Laws, Norton, J. J. (1979). International & Comparative Law Quarterly, 28(4), 575-597. This paper focuses on the application of the United States antitrust and securities laws to international transactions.
- ● Extraterritoriality as standing: A standing theory of the extraterritorial application of the securities laws, Reuveni, E. (2009). UC Davis L. Rev., 43, 1071. This Article contends that the current treatment of the extraterritorial scope of the 1934 Securities Exchange Act as a question of subject matter jurisdiction is wrong. It further argues that contrary to current practice, the extraterritorial reach of Section 10(b) and Rule 10b-5 of the 1934 Act is really a question of statutory standing. The author proposes an approach to support these claims.
- ● Extraterritorial Reach of American Economic Regulation: The Case of Securities Law, Sandberg, S. (1976). Harv. Int’l. LJ, 17, 315. This paper focuses on the application of the United States domestic law in solving extraterritorial securities cases.
- ● Extraterritorial Application of the United States Securities Laws: The Need for a Balanced Policy, Thomas, B. S. (1981). J. Corp. L., 7, 189. In this paper, the author wishes to discuss how foreign corporations, that is corporations outside the United States, are subject to the anti-fraud provisions of the US securities law for authorizing the sale of stocks.
- ● The Extraterritorial Application of the Federal Securities Code: A Further Analysis, Curtis, J. W. (1976). Conn. L. Rev., 9, 67. This paper makes advanced analysis into the Federal Securities Code. It discusses its shortcomings, and the reason for its enactment.