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Legal Commentary

: Prawfs

The Effects Test and Transnational Litigation

By Dan Markel, Ethan Leib, Rick Garnett, Matt Bodie, Paul Horwitz , Steve Vladeck, and Orly Lobel

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Eric's post on the litigation from the Large Hadron Collider ("Could bad judging cause the earth to be sucked into a black hole? Maybe"), spurred this post on a slightly different issue.

The Hawaiin case that Eric mentions -- although dismissed on jurisdictional grounds -- is part of a larger trend. In recent years, litigants have increasingly sought to use domestic laws to regulate the activities of foreigners outside U.S. borders. In the United States, domestic laws have long regulated extraterritorial conduct in the commercial context (think antitrust and securities laws as classic examples), but over the last decade courts have appeared to be more willing to apply all sorts of public and private laws to activity occurring abroad, so long as the foreign conduct has some effect within the United States. Other countries have now also followed suit, applying their own laws extraterritorially (a famous example being the Yahoo! case, where a civil lawsuit was brought in France after Yahoo! auctioned Nazi memorabilia in the U.S.). In fact, American businesses are concerned over EU's growing intrusion into U.S. mergers and acquisitions (think of the Honeywell and Microsoft cases)

The growth in transnational litigation (and extraterritorial cases) may be an inevitable result of globalization and the spread of American style litigation. I tend to believe though that the trend of using domestic laws to regulate global activities is problematic and a threat to long-term American interests. The problems created by extraterritorial laws also seem to have been overly downplayed by legal academics. I have written two recent articles on the topic. The first will soon appear in the Vanderbilt Law Review -- The Effects Test: Extraterritoriality's Fifth Business. The second will appear early next year in the Minnesota Law Review -- Reclaiming International Law from Extraterritoriality. Both articles - although coming at the issue from different angles -- criticize the use of domestic laws to regulate foreign conduct.

What may be absurd then in cases like the Hawaiin particle collider case is not the merits of the claim (as Eric points out courts often confront significant environmental and scientific issues). Rather, what seems absurd is that a United States court could apply U.S. domestic law to regulate activities in Switzerland of non-U.S. citizens.

Full post as published by Prawfs on October 21, 2008 (boomark / email).

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