extra-territorial application of united states law paul b. klaas partner-in-charge (international)...
TRANSCRIPT
www.dorsey.com
EXTRA-TERRITORIAL APPLICATION OF UNITED STATES LAW
Paul B. KlaasPartner-in-charge (International)
Dorsey & Whitney LLPMinneapolis / London
www.dorsey.com 3
Microsoft v. ATT (U.S. Sup. Ct. 2007)
“There is a presumption that United States law governs domestically but does not rule the world.”
www.dorsey.com 4
www.dorsey.com 5
SOME US LAWS WITHEXTRA-TERRITORIAL APPLICATION
Antitrust Laws
Securities Fraud Laws
Foreign Corrupt Practices Act
Export Administration Regulations
Cuban Asset Control Regulations
www.dorsey.com
US ANTITRUST LAWS
www.dorsey.com 7
Sherman Act (1890)
www.dorsey.com 8
Sherman Act
Section 1: Restraint of Trade
Section 2: Monopolization
www.dorsey.com 9
Clayton Act (1914)
www.dorsey.com 10
Clayton Act
Price discrimination
Tying
M&A
www.dorsey.com 11
“Effects Test”
US courts have jurisdiction over the conduct of foreign corporations where that conduct was intended to, and actually did, affect US commerce
US v. Alcoa (2d Cir. 1945)
www.dorsey.com
Foreign Trade Antitrust Improvements Act
(“FTAIA”) (1982)
www.dorsey.com 13
FTAIA
US antitrust laws apply if:
1) The conduct has a “direct, substantial, and reasonably forseeable effect” on US domestic commerce, imports into the US, or US exporters, and
2) The conduct “gives rise to a claim under the provisions of the [US antitrust laws]”
www.dorsey.com 14
Statoil v. Heeremac (5th Cir. 2001)
Global conspiracy among barge owners caused American consumers to pay “supracompetitive prices for oil”
But, the global conspiracy did not “give rise to an [antitrust] claim” by Statoil
So, US antitrust laws do not apply
Case dismissed
www.dorsey.com 15
Comity
Timberlane Lumber Co. v. Bank of America (9th Cir. 1976)
US federal courts should balance “effects” on the United States of anticompetitive conduct in foreign countries against “the degree of conflict with foreign law or policy” before finding that US antitrust laws apply
www.dorsey.com 16
US SECURITIES LAWS
www.dorsey.com 17
US SECURITIES LAWS
Securities Act of 1933– Section 5: requires that corporations register with
SEC if wish to sell securities in the US
Securities Act of 1934– Section 10(b)(5): forbids “untrue statement of a
material fact”
Public Company Accounting Reform and Investor Protection Act of 2002
– the “Sarbanes-Oxley Act”
www.dorsey.com 18
Sarbanes-Oxley Act of 2002
www.dorsey.com 19
Sarbanes-Oxley Act
Increased disclosure requirements for public companies
Corporate executives personally responsible for financial information reported to SEC
Increased SEC enforcement powers and penalties
www.dorsey.com 20
Effects and/or Conduct
In determining whether US securities laws apply, US courts will apply:
An “effects test” and
A “conduct test”
www.dorsey.com 21
Foreign³ [foreign-cubed cases]
“1) foreign plaintiffs suing,
2) a foreign issuer in an American court for violations of American securities laws based on securities transactions in
3) foreign countries.”
Morrison v. National Australia Bank Ltd.(2d Cir. 2008) (certiorari accepted by US Sup. Ct.)
www.dorsey.com 22
Morrison v. National Australia Bank Ltd. (2d Cir. 2008)
Q. “What conduct comprises the heart of the alleged fraud?”
A. The fraudulent statements made at NAB headquarters in Australia, not the falsified numbers calculated in US
No jurisdiction in US federal court
Case dismissed
www.dorsey.com
Foreign Corrupt Practices Act
(“FCPA”)
www.dorsey.com 24
FCPA
A “covered person”
may not make a prohibited payment or offer
to a “foreign official”
with corrupt intent.
www.dorsey.com 25
FCPA
“Covered person” includes, for example:
– US citizens– US corporations– Foreign subsidiaries of US corporations– Foreign corporations who are “issuers”
registered with the SEC– Anyone acting in the US
www.dorsey.com 26
FCPA
“Prohibited payments or offers” include, for example:
– Cash– Paid travel expenses– Free upgrades of airplane seats– Requested donations to charities– “Anything of value”
www.dorsey.com 27
FCPA
“Foreign official” includes, for example:
– Government officials– Employees of state-owned or controlled
entities
www.dorsey.com 28
FCPA
“Corrupt intent” includes, for example:
– Influencing any act or decision, or– Securing any improper advantage, or– Inducing the foreign official to use his
influence– To obtain or retain business
www.dorsey.com 29
Lanny Breuer Assistant Attorney General of the United States
(Criminal Division) November 12, 2009
“Our focus and resolve in the FCPA area will not decrease, and we will be intensely focused on rooting out foreign bribery in your industry. That will mean investigation and, if warranted, prosecution of corporations to be sure, but also investigation and prosecution of senior executives. Effective deterrence requires no less. Indeed, we firmly believe that for our enforcement efforts to have real deterrent effect, culpable individuals must be prosecuted and go to jail…”
www.dorsey.com 31
EXPORT ADMINISTRATION REGULATIONS
(“EAR”)
www.dorsey.com 32
Export Administration Regulations (“EAR”)
Targets “dual use” items -- items that can have commercial or military uses
Items can be commodities, technology, software…
www.dorsey.com 33
EAR
US Department of Commerce license is required, if: 1) the item is “in the United States” or is
“U.S. origin,” 2) the item is on the Commerce Control List
(15 C.F.R. pt 774), and 3) the item is being exported or re-exported to a
country on the Country Chart (15 C.F.R. 738)
www.dorsey.com 34
EAR
“Re-export” includes:
– Transfer of U.S. origin items from one foreign country to another
– Transfer of technology or software to a foreign national outside of the US (e.g., delivery, oral briefing, visual inspection)
www.dorsey.com 35
CUBAN ASSETCONTROL REGULATION
(“CACR”)
www.dorsey.com 36
Cuban Asset Control Regulation (“CACR”)
CACR bars US citizens or entities
from transacting business with Cuba
www.dorsey.com 37
CACR applies to:
All US citizens
All US permanent residents
All individuals and organizations physically in the US
All branches and subsidiaries of US organizations throughout the world
– US Office of Foreign Assets Control
www.dorsey.com 38
Nyheter
Cuba fordømmer norsk hotellnekt
Scandic Edderkoppens amerikanske eiere vil ikke ha kubanske gjester.Foto: Espen Braata /ScanpixKubanske myndigheter beskylder Norge for å bøye seg for amerikansk press etter at en kubansk delegasjon ble nektet å ta inn på et amerikanskeid hotell i Oslo.
www.dorsey.com 39
Helms-Burton Act (the “Libertad” Act) (1996)
www.dorsey.com 40
Helms-Burton Act
Title III: “Protection of Property Rights of US Nationals”
– US nationals who had property expropriated by the Cuban government can sue anyone who “traffics” in such property, including non-US individuals and entities (suspended)
Title IV: “Exclusion of Certain Aliens”
– “Traffickers” (including corporate executives) can be denied entrance to the US
www.dorsey.com 41
Canadian Response to theUS Helms-Burton Act
The Godfrey-Milliken Bill (Canada, 1996)
www.dorsey.com 42
Godfrey-Milliken Bill
Persons loyal to England who fled the US in 1776 and became Canadians may reclaim land confiscated by American revolutionary courts
Americans who “traffic” in property confiscated from loyalists shall be barred from Canada
(The bill was not passed by the Canadian Parliament)
