Recent trends in extraterritorial jurisdiction — The Sarbanes-Oxley Act and its implications on sovereignty

Abstract

This paper endeavors to analyze the current U.S. practice on the field of extraterritorial application of corporate governance law. As it is widely known, sovereignty is one of basic tenets of public international law, and its relevance is considerably debated in our age. Therefore, the main question of the paper is whether this qualitatively new U.S. practice on the field of extraterritoriality can contribute any insight for the better comprehension of the transformation of sovereignty. So, it will basically compare the lessons stemming from the adoption of the Sarbanes-Oxley Act to the classical concept of sovereignty.In its first part the paper briefly introduces the reader into the basic notions of extraterritorial jurisdiction. In doing so, it analyzes some theoretical problems, the former U.S. antitrust law practice and the European approach. The second part of the paper deals with the Sarbanes-Oxley Act as an emblematic and very actual example of corporate governance law having extraterritorial reach. This part discusses the major provisions of the act in detail as well as examines the different arguments justifying or criticizing it. In the last part the paper tries to reflect the results of the earlier inquires to different dimensions of sovereignty. Through three different prisms-Legislatio, Legitimatio and Subordinatio-the paper compares each aspect of sovereignty to the lessons flowing from the case of the Sarbanes-Oxley Act in order to get relevant insights concerning the transformation of sovereignty.In conclusion, the paper argues that the classical 19th century approach of sovereignty is outdated because of the transformation of the global economic and political context. But, sovereignty, as a legal basis and legitimizing factor is still in play if the question is the protection of fundamental national interests. As it exactly happened in the case of the Sarbanes-Oxley Act which intends to protect a pillar-the confidence in corporate governance-of the basic structure of U.S. free market system.