Extraterritorial Effect Research Articles

Extraterritoriality and public procurement regulation in the context of global supply chains’ governance

With the globalisation of supply chains, the respect for human rights and labour standards in procurement practices has become a crucial priority also in the domestic regulation of public procurement. This paper focuses on two specific characteristics of the use of public procurement regulation for the enforcement of human rights and labour standards: its extraterritorial effects on companies and firms across different jurisdictions and its reliance on private certifications and labels. Both of these new aspects are evident within the new 2014 EU Procurement Directives, which includes a number of far-reaching regulatory features that facilitate the monitoring of the respect for human rights and labour standards of contractors and subcontractors across borders. However, this new dimension of public procurement has the potential to create tension within the framework of multilateral trade governance, specifically, the World Trade Organization (WTO) trade regime.

Externalising the energy law: the domestic impact beyond the current domain of the European Union

While the European Union's (EU) historic inward-looking energy policy is rapidly shifting through extending the application of energy law to non-EU countries, there has not been much academic focus on this phenomenon yet. Most of the scholarly work is still related to the developments at the European level and does not include the wider extraterritorial effect of EU energy acquis in neighbouring countries. The underlying objective of this paper is to address this deficit by analysing the domestic impact that the EU energy law has outside its bounds. The case of Georgia is referred in this context to enrich the paper with practical examples and study the consequences of EU energy normative power within the eastern Europeanisation framework.

Extraterritoriality of EU law and human rights after Lisbon: The case of trade and public procurement

The paper introduces the theme and topics of this Special Issue on the extraterritoriality of EU law and human rights in the fields of trade and public procurement since the entry into force of the 2009 Treaty of Lisbon. It briefly explores the meaning of extraterritoriality in international (human rights) law and the EU legal order highlighting the complexity of such notion in both legal systems. In so doing, it provides the context and focus of analysis of the collection of papers that make up this Special Issue, which addresses a number of topical questions concerning the extraterritorial conduct of the EU, as well as the extraterritorial effects of EU law in those specific fields, from the perspective of human rights.

Risks of Expanding the Geographical Scope of EU Energy Law

In the pursuit of its energy policy objectives, the EU has endeavoured to extend the application of internal energy law to non-EU countries. Until now the application of EU law has. in this context, focused on specific provisions of private law, but the latest proposals from the Commission have the intention to give EU energy law wider extraterritorial effect. The objective of this Article is to examine the risks that would entail from international law, if EU energy law is extended extraterritorially to non-EU countries. For one, the United Nations Convention on the Law of the Seas (UNCLOS) establishes a number of rights to marine pipelines. More generally, the international trade rules of the WTO apply also to trade in energy goods and consequently create a number of rights and obligations. These aspects are discussed in relation to various territories that export natural gas to the EU via pipeline.

Personal Data Protection in New Zealand: Lessons for South Africa?

In 1995 the European Union adopted a Directive on data protection. Article 25 of this Directive compels all EU member countries to adopt data protection legislation and to prevent the transfer of personal data to non-EU member countries (“third countries”) that do not provide an adequate level of data protection. Article 25 results in the Directive having extra-territorial effect and exerting an influence in countries outside the EU. Like South Africa, New Zealand is a “third” country in terms of the EU Directive on data protection. New Zealand recognised the need for data protection and adopted a data protection Act over 15 years ago. The focus of this article is on the data protection provisions in New Zealand law with a view to establishing whether South Africa can learn any lessons from them. In general, it can be said that although New Zealand law does not expressly recognise a right to privacy, it has a data protection regime that functions well and that goes a long way to providing adequate data protection as required by the EU Directive on data protection. Nevertheless, the EU has not made a finding to that effect as yet. The New Zealand data protection act requires a couple of amendments before New Zealand might be adjudged ‘adequate’. South Africa’s protection of the right to privacy and identity is better developed and more extensive than that of New Zealand. Privacy is recognised and protected in the law of delict and by the South African Constitution. Despite South Africa’s apparently high regard for the individual’s right to privacy and identity and our well-developed common and constitutional law of privacy, South Africa does not meet the adequacy requirement of the EU Directive, because we do not have a data protection Act. This means that South African participants in the information technology arena are at a constant disadvantage. It is argued that South Africa should follow New Zealand’s example and adopt a data protection law as soon as possible.

Regulatory power, post-crisis transatlantic disputes, and the network structure of the financial industry

AbstractThe international financial crisis was followed by waves of domestic regulatory reforms, first and foremost, in the United States and the European Union. Post-crisis financial regulation was sometimes different across jurisdictions. Moreover, the United States and the European Union sought in various ways to (re)assert their regulatory power not only vis-à-vis the market, but also with regard to other jurisdictions, which often resisted the projection of regulatory power beyond national borders. Consequently, a handful of important post-crisis transatlantic regulatory disputes emerged concerning E.U. rules on hedge funds, U.S. rules on bank structure and E.U. and U.S. rules on over-the-counter (OTC) derivatives. These disputes mainly involved the terms of access to each other's markets, the equivalence between domestic rules, and the extraterritorial effects of those rules. Some of these disputes were also intra-E.U. disagreements, whenever the preferences of the United Kingdom were different from those of Continental countries and similar to those of the United States. The network structure of the financial industry and the patterns of financial interdependence across the Atlantic amplified the extra territorial effects of domestic reforms, but at the same time triggered an active involvement of the transnational financial industry in the management and, eventually, the settlement of these disputes.

The Fate of the Award Annulled in the Country of the Seat

AbstractThe topic of the fate of the award annulled in the legal order of the seat has always been at the center of fervent debates. Once annulled, does the award cease to exist? Is it correct to speak about the extraterritorial and erga omnes effects of the judgment of the courts of the seat annulling the award? Scholars and national courts have tried to give an answer to these questions finding a possible solution in the framework of the New York Convention. However, it is doubtful whether the New York Convention addresses this issue. This article aims at exploring in a critical manner the different theoretical views on the fate of the award annulled in the country of origin, also taking into account case law of national courts on the topic. Three theoretical theses are analyzed and compared. A first thesis affirms that (i) an award annulled in the country of the seat cannot be enforced anywhere else, a second that (ii) the courts of the enforcement States have discretion in deciding whether to grant recognition and enforcement to a foreign award and a third that (iii) the annulment of an award in the State does not constitute a ground to refuse the enforcement of the award.

The Tempting of American Antitrust Law: An Open Letter to President Trump

The greatness of American antitrust law derives from its having been forged since 1890 by federal judges who distilled general principles from individual cases actually litigated on a factual record and scrutinized under the Federal Rules of Evidence — including government cases in which the Antitrust Division or the Federal Trade Commission (FTC) bore the burden of proof. But today the Division and the FTC are commissariats dispensing ukases of “soft law” through guidelines, business review letters, speeches, press releases, and raised eyebrows. They avoid litigating because they lose too often when they need to convince a federal judge of the righteousness of their interpretations of the law. The degeneration of U.S. antitrust enforcement has global ramifications. Citing an “abuse of dominance,” foreign enforcers routinely threaten to punish the most successful American multinational companies that compete with or supply their national champions. These foreign enforcers pursue what are, by American standards, implausible theories of liability that most U.S. district judges would quickly discern to be unsupportable by facts and sound economic analysis. Typically, these foreign enforcers also deny American companies the due process that the U.S. Constitution would guarantee a defendant in any American courtroom. The latest example occurred in December 2016, when the Korean Fair Trade Commission (KFTC) imposed an $865 million fine on Qualcomm, the U.S. pioneer in cellphone technology. In its press release announcing the fine, the KFTC acknowledged the assistance of Korea’s national champion, Samsung. The ease with which antitrust enforcers in countries like Korea and China can flagellate an American multinational can corrode the rule of law within the United States. It is tempting for American antitrust enforcers to encourage their foreign counterparts to prosecute American multinationals under more parsimonious standards of due process and more invasive theories of antitrust liability than American law would ever permit. The practical economic effect of the foreign prosecution can be to produce a result having extraterritorial effect throughout the world — even in the United States, where the conduct is lawful. President Obama’s Antitrust Division, encouraged by several Silicon Valley giants, pivoted from being an enforcer of U.S. antitrust law to being a global industrial planner that favored some business models in the technology sector over others. The Division then concocted and disseminated soft law in the form of speeches and business review letters that favored the economic interests of the Silicon Valley giants. Such edicts circle the globe in a mouse click and abet antitrust enforcers in Korea and China, as well as Europe. By executive order, President Trump should instruct his administration that no official of the U.S. government may aid a foreign antitrust authority (1) that seeks to prosecute an American company doing business in its jurisdiction on a theory of “abuse of dominance” that would be unlikely to withstand a motion to dismiss if instead pleaded under U.S. antitrust law in an American court or (2) that employs investigatory or judicial procedures that lack the fundamental fairness that American justice requires. President Trump should appoint to the Antitrust Division and the FTC only persons who are willing to bear the burden of proving in federal court that the interpretation of antitrust principles that they espouse deserves to be called the law of the United States.

State Obligations to Regulate and Adjudicate Corporate Activities Under the European Convention on Human Rights

This study examines State obligations to prevent and redress corporate-related human rights violations under the European Convention for the Protection of Human Rights and Fundamental Freedoms. It discusses the evolving jurisprudence of the European Court of Human Rights in two areas of international legal doctrine of particular relevance to the business and human rights debate: the application of international human rights obligations to non-state actors (the public-private divide); and the jurisdictional scope of international human rights treaties (the territoriality-extraterritoriality divide). The study revises and updates a 2010 contribution to the mandate of the Special Representative of the United Nations Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Entities John Ruggie. The introduction offers an overview of the global regulatory framework on business and human rights. Part B systematises the case law of the European Court of Human Rights (ECtHR) on the public-private divide in terms of two categories of State obligations: negative obligations to respect human rights in relation to corporations acting as state agents; and positive obligations to protect human rights in relation to corporations acting as third parties. Part C discusses the ECtHR’s approach to the extraterritorial dimension of State obligations to prevent and redress corporate-related human rights violations. The study discusses cases of direct extraterritorial jurisdiction (acts ‘performed’ outside the State’s territory) and extraterritorial effects cases (acts ‘producing effects’ outside the State’s territory), and their respective relevance to the business and human rights domain. Consideration is also given to the growing body of case law on the extraterritorial dimension of the human right to remedy, which remains a pressing concern in the business and human rights domain.

The Main Problems Related to the Financial Transaction Tax: The Case of an Extraterritorial Effect and the Coverage of Pension Funds

It is globally accepted that the financial sector caused the financial crisis of 2008. As a result, it was internationally agreed that it should pay a fair share to the public finances. The Financial Transaction Tax is an European model of ‘the financial sector paying a fair share'. However, the Financial Transaction Tax is a new tax proposed by the European Commission which - at the time of this article - still remains at the stage of discussion. Therefore, the author of this article discusses the main problems which might hinder the further introduction and functioning of the tax, explaining the reasons which might have caused such problems and drawing the attention how these problems are dealt with in the context of current debates of the tax.

The Exclusive Jurisdiction of Flag States: A Limitation on Pro-active Port States?

The loosely phrased, and undefined, ‘exclusive flag state jurisdiction’ principle of the United Nations Law of the Sea Convention Article 92, has arguably proved to be a red herring for states and academia, in its being raised as a limiting factor to extra-territorial prescription by non-flag states. This has extended to port state jurisdiction discussions, and was raised by analogy for aircraft, before the European Court of Justice, in relation to the limits of jurisdiction over high seas overflight. This paper argues for a limited scope to the term ‘jurisdiction’ in Article 92. It concludes that far from being a limiting factor, the principle of flag state exclusivity is solely concerned with the enforcement jurisdiction of states on the high seas. The increasing use of port state prescriptive jurisdiction, particularly those practices with extra-territorial effect, provides further evidence that this is the correct interpretation.

Sharing Water from Transboundary Rivers: Limits on State Power

Disputes between States of Australia over the sharing of the waters of rivers that flow through or form the boundary between two or more States (‘transboundary rivers’) have frequently been framed in terms of the ‘rights’ of the States. This article seeks to reframe the resolution of these disputes in terms of limits on State legislative and executive power. After reframing the problem in this way, the article first examines the scope of State legislative and executive power and its extraterritorial effect with respect to the regulation of transboundary rivers. Secondly, the article considers inconsistencies between the laws and regulations of two States with respect to transboundary rivers. Finally, constitutional implications and limits on State power are examined, with particular focus on whether there may be scope for the extension of the Melbourne Corporation principle to assist in the resolution of some transboundary river disputes.

Financial Transaction Tax: An Eleven-Point Analysis of Transaction Taxes Across Member States

This article analyses the European Commission's Proposal for Financial Transaction Tax with transaction taxes currently implemented in Member States of the European Union. The features identified for this purpose include transactions liable to tax, recognition of legal title, the tax base, jurisdictional rules, provisions for groups, exemptions, deduction rules and timing considerations. This analysis highlights that the Proposal, in principle, varies little from existing transaction taxes; tax rates are generally low and an extraterritorial effect is found in a number of Member States. The Proposal is however broader in scope and contains limited exemptions. The commonalities found in transaction taxes could help to forge a common framework for future reform of the Proposal whilst differences shed light on problems that may be encountered with respect to implementation. Greater support and guidance will be required.

The EU Data Protection Law Reform: Challenges for Service Trade Liberalization and Possible Approaches for Harmonizing Privacy Standards into the Context of GATS

With a view to ensuring the privacy rights of EU residents, the European Commission made a proposal on the ‘EU Data Protection Regulation’, which has been given an extraterritorial effect when it comes to cross-border processing of EU-residents’ personal data. However, the ‘adequacy assessment’ provided therein might lead to the EU’s violations of the GATS. In the first part of this paper, an overview of the provisions of the proposed Regulation is conducted. This is followed by an examination of whether the adequacy assessment is consistent with EU’s obligations under the GATS. Although there has not been a case regarding such issues in the WTO thus far, based on the preceding rationale of the Dispute Settlement Body, the author presumes that the adequacy assessment is very likely to be determined inconsistent with the abovementioned rules within the GATS. Hence, it is for the author to provide possible methods to harmonize the interests of privacy and data protection with free trade in the context of GATS in the subsequent section of this paper by utilizing the general exception clause and adapting relevant privacy standards to Article 6.5 of the GATS.

THE EU DATA PROTECTION LAW REFORM: CHALLENGES FOR SERVICE TRADE LIBERALIZATION AND POSSIBLE APPROACHES FOR HARMONIZING PRIVACY STANDARDS INTO THE CONTEXT OF GATS

With a view to ensuring the privacy rights of EU residents, the European Commission made a proposal on the ‘EU Data Protection Regulation’, which has been given an extraterritorial effect when it comes to cross-border processing of EU-residents’ personal data. However, the ‘adequacy assessment’ provided therein might lead to the EU’s violations of the GATS. In the first part of this paper, an overview of the provisions of the proposed Regulation is conducted. This is followed by an examination of whether the adequacy assessment is consistent with EU’s obligations under the GATS. Although there has not been a case regarding such issues in the WTO thus far, based on the preceding rationale of the Dispute Settlement Body, the author presumes that the adequacy assessment is very likely to be determined inconsistent with the abovementioned rules within the GATS. Hence, it is for the author to provide possible methods to harmonize the interests of privacy and data protection with free trade in the context of GATS in the subsequent section of this paper by utilizing the general exception clause and adapting relevant privacy standards to Article 6.5 of the GATS.

Transatlantic Regulatory Interdependence, Law and Governance: The Evolving Roles of the EU and US Legislatures

AbstractThis article analyses the roles of the European Parliament and the US Congress in addressing regulatory interdependencies arising in the EU–US strategic partnership. It examines their international actorness as a potential remedy for the problems of democratic participation, executive dominance, and opaqueness in the shaping of transatlantic relations. It shows that legislatures significantly contribute to regulatory discrepancies and trade disputes and that the adverse consequences thereof justify more intensiveex antecooperation between them. The analysis conducts two groups of case studies to demonstrate how the EP and Congress influence law and policy in areas of transatlantic regulatory and foreign policy divergence. The first group of case studies analyses parliamentary involvement in the making of international agreements (TTIP and ACTA). The second group of case studies inspects legislative action with extraterritorial effects (US Helms–Burton and Sarbanes–Oxley Acts). The article argues that the EP and Congress have so far frequently acted against the spirit of the strategic partnership in ways that are injurious to the interests of the other side, and discusses whether an interparliamentary early warning mechanism could reduce legislative and political frictions and increase the coherence of transatlantic lawmaking.

The EU's human rights obligations in relation to its data protection laws with extraterritorial effect

A form of extraterritoriality is evident in EU data protection law. International human rights law, as a subset of public international law, can help determine what are arguably the EU's obligations to safeguard the fundamental right to data protection extraterritorially. The EU could be understood to have positive and negative obligations to respect, protect, and fulfil its citizens' right to data protection. As the fundamental right to data protection evolves to carry more weight in the EU, this could amplify the EU's obligations under human rights law to protect its citizens' personal data when such data are processed outside EU territory.

United States v. Bond and Information-Forcing Defaults: The Work that Presumptions Do

This article, written for a symposium on Bond v. United States, connects the law and economics of contract interpretation to the Supreme Court’s modern practice of creating statutory interpretive presumptions. The paper compares information-forcing defaults, both majoritarian and penal, to contract rules that allow parties to design mechanisms to deal with future contingencies about which no party has special knowledge. Delegation rules allow parties to specify a set of contingencies that, upon realization, entitle a selected third party to supplement the contract to incorporate post-contractual information. From a welfare perspective, information-forcing defaults and delegations are complements, each desirable under specified conditions. But, as to any particular issue, these strategies are contradictory. Choosing a delegate to resolve downstream problems reduces a party’s incentive to disclose relevant information at the time of contracting. The challenge thus becomes determining the conditions, both in theory and in practice, where each approach is likely to optimize the value of a contract. The paper then looks at several informal models of how Congress and the federal judiciary operate, and in particular at how they interact dynamically with respect to statutory interpretation. It then identifies the circumstances under each model that would support a conclusion that Court’s current trend may contribute to the social good. It argues that none of the areas where presumptions have emerged satisfy the requirements for a delegation of downstream lawmaking to the courts based on unknown information. In contrast, statutory presumptions against encroachments into areas of core state competence (Bond), extraterritorial effect of regulation (Morrison and Kiobel), violations of international law (Charming Betsy), and constitutional confrontations (Catholic Bishop) reflect a plausible majoritarian default of avoiding conflicts with parallel legal regimes. The presumption against implied causes of action, by contrast, reflects a penal default based on the need to promote transparency and accountability in lawmaking.

The EU's Human Rights Obligations in Relation to Policies with Extraterritorial Effects

In principle, there are two ways in which states and international organizations can violate the human rights of persons outside their territorial jurisdiction. The first is by extraterri t orial conduct; the second is by domestic conduct, in the form of policies with extraterritor ial effect. This article considers the second of these scenarios, taking as its case study the EU’s obligations under EU law. To this end, it analyses Articles 3(5) and 21(3)(1) of the EU Treaty, EU fundamental rights, and the EU’s international obligations, which are also binding under EU law. It concludes by looking at the enforcement of any such obligations by individuals, the EU institutions, and EU Member States.

The EU's Human Rights Obligations in Relation to Policies with Extraterritorial Effects: A Reply to Lorand Bartels

The scope of human rights is undergoing a paradigm shift, from a territory-based conception to a functional conception, which tends to protect human rights against the extraterritorial exercise of public authority. In the EU domestic system, this is upheld by Articles 3(5) and 21 TUE, which establish the promotion and protection of human rights as a foreign policy directive. However, the normative effect of these provisions is limited. Due to restraints deriving from the EU Treaties, these two provisions do not seem capable of providing a sufficient legal basis for EU action aimed at promoting and protecting human rights. To endow the Union with the means of action necessary to discharge the engaging function of global protector of human rights, a further development of the European constitutional framework seems to be indispensable.