Law School Wiki

Presumption Against Extraterritoriality

2 min read

Presumption Against Extraterritoriality

Definition

A canon of statutory construction that presumes federal statutes apply only within the territorial jurisdiction of the United States unless Congress has clearly indicated otherwise. The presumption reflects the longstanding principle that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.

Elements / Two-Step Framework

Courts apply a two-step framework (developed in RJR Nabisco v. European Community, 2016):

  1. Step One: Has Congress rebutted the presumption by giving the statute clear, affirmative indication that it applies extraterritorially? If yes, apply the statute extraterritorially according to its terms.
  2. Step Two: If the presumption is not rebutted, does the conduct relevant to the statute’s focus occur within the United States? Courts look to where the conduct occurred, not where effects were felt.

The focus of the statute — the object of Congress’s primary concern — determines the relevant conduct for Step Two analysis.

Key Cases

  • Morrison v. National Australia Bank (2010): Held Rule 10b-5 under the Securities Exchange Act does not apply to securities not traded on U.S. exchanges, even if U.S. investors suffered harm. Established the transactional test: U.S. securities law applies to transactions in securities listed on domestic exchanges or domestic transactions in other securities.
  • EEOC v. Arabian American Oil Co. (1991): Title VII does not apply to U.S. citizens employed abroad by American employers absent clear congressional statement.
  • RJR Nabisco v. European Community (2016): Extended the two-step analysis to civil RICO; held that while RICO’s substantive provisions apply extraterritorially (predicate acts occur abroad), the civil right of action under §1964(c) requires a domestic injury.

Policy / Rationale

  • Prevents unintended conflicts with foreign law and interference with foreign sovereigns.
  • Reflects concern for international comity and avoids diplomatic friction.
  • Forces Congress to make deliberate, transparent choices when it wishes to regulate extraterritorial conduct.
  • Courts are poorly suited to determine when extraterritorial application is appropriate — that judgment belongs to Congress.

Courses

Graph View

Backlinks