Sjicl 1998 1

1 Extraterritorial Criminal Jurisdiction 2 SJICL
Singapore Journal of International & Comparative Law

(1998) 2 pp 1 36
EXTRATERRITORIAL CRIMINAL JURISDICTION:
BRITISH, AMERICAN AND COMMONWEALTH
PERSPECTIVES.
This article surveys developments in the area of criminal jurisdiction. It seeks to formulate
a theory accommodating these developments which could accommodate conflicts resulting
from excessive claims to jurisdiction.
I. INTRODUCTION
AS facilities for global transport and communications increase and the
interlinking of commerce on a global scale accelerates, the opportunities
for transnational crime also grow. There is an evident growth of transnational
crimes, particularly, commercial crimes involving fraud, bribery, violation
of security laws, drug-trafficking, money laundering, environmental pol-
lution and terrorism. Recent events show that the machinery devised for
the investigation and prevention of such crimes has not kept pace with the
increasing sophistication of those involved in the commission of these crimes.
Globalisation and technology have brought about the positive effects of
integrating markets and bringing about the so-called borderless world.
But, the negative consequences of globalisation is the fact that it has also
made crime go global. The same techniques that facilitate business also
facilitate crime. Electronic and other means of communication which are
used in modern commerce and banking have diminished the significance
of territorial boundaries. Funds can be transferred between banks in different
countries and shares can be traded globally with amazing speed. This
globalization of banking and commerce has led to greater opportunities for
fraud in such transactions.
1
Money, that is the fruit of crime in one state
can be transferred several times over to differrent states and kept in a safe
haven. Rapid means of transport not only allow the transport of prohibited
goods like drugs and contraband but permit the escape of offenders easily.
1
The insider trading scandals involving Boesky and Levine are shown up in other countries.
They were connected with the Guiness affair in the United Kingdom investigations into
which commenced with information supplied by Boesky to the SEC and passed on to the
Board of Trade.
(1998) 2 Singapore Journal of International & Comparative Law
The intermeshing of the politics of the separate regions of the world leads
to an increase of political terrorism and hijacking of aircraft. Criminal gangs,
previously organized within one country have found it profitable to link
with gangs in other states so that they could help each others criminal
activitites. This linkage has prompted one international relations scholar
to suggest that these gangs are significant transnational actors very much
in the way of states or multinational corporations and that their activities
should be studied as they have an impact on international relations.
2
These
are new phenomena which requires rapid responses from the law.
But, the law has not kept apace with these global changes. Perspectives
on criminal jurisdiction differ from state to state, adding to the confusion
and providing comfort to transnational criminals.
3
This article is largely
concerned with the legal attitudes to criminal jurisdiction in England and
the states which have been influenced by English attitudes to the issue.
The latter states include the United States and states of the Commonwealth.
The methods of dealing with transnational crime in England, the United
States and the Commonwealth countries are still buried in notions of territoriality
which were evolved in more sedate times.
4
A rigid notion of territoriality
as the basis for criminal jurisdiction requires that the trial of the offender
should take place where the offence was committed. Extradition now provides
the only means of obtaining jurisdiction over an offender who is overseas,
either because he is a fugitive or because he manipulated the events leading
to the crime from outside the territory of the state seeking jurisdiction.
5
From a Singapore perspective, the fortuitous existence of an extradition
treaty made between Britain and Germany enabled the extradition of Leeson,
the principal actor in the Barings fraud, who had fled to Germany to be
extradited to Singapore for trial. Recent cases illustrate the clumsiness and
2
S Strange. Rival Firms and Rival States (1994).
3
For a study of attitudes to criminal jurisdiction in different states, see report by M Bos on
The Extraterritorial Jurisdiction of States (1993) 65 Ann IDI 14.
4
In England, the authoritative statement of territoriality was in R v Keyn (1876) 2 Ex D 63.
Further see on the case, G Marston, The Marginal Sea Bed (1980) 114-137. There were
progressive extensions of criminal jurisdictions after the case which are detailed in Marstons
book.
5
It would appear from the unfortunate decision in Alvarez-Machain v US (1992) 112 S Ct
2188 that, in the United States, kidnapping is an alternative means of obtaining jurisdiction.
The view that jurisdiction could be obtained through the kidnapping of offenders has been
severely criticised in literature following the case. Cases in England and South Africa have
held that they will refuse to exercise criminal jurisdiction over kidnapped offenders. R v
Horsferry Magistrates. [1994] 1 AC 42.
the delay involved in the use of extradition as the mechanism for the
prosecution of those accused of transnational frauds.
6
Given this situation,
the alternative is to move away from territoriality as the basis of criminal
jurisdiction. But, there appears to be an entrenched view against the adoption
of such a course. A recent Privy Council decision, Liangsiriprasert v United
States Government,
7
however, shows a judicial awareness of the need to
depart from these old attitudes. The decision of the Privy Council has been
followed by the Court of Appeal in England in one case.
8
But a more recent
case indicates that the territoriality principles continues to have sufficient
vigour to prevent a fuller reconsideration of the issues involved in juris-
dictions over crimes initiated from abroad.
9
Earlier, the law reform agencies
in England and Canada had advocated changes to the law.
10
But, when
legislation has come about, it has dealt piecemeal with specific situations.
11
6
The most recent incident is the prolonged litigation concerning the extradition of Lorrain
Osman to stand trial in Hong Kong in respect of alleged frauds committed in Hong Kong
against Bank Bumiputera Malaysia. The principal effects of the fraud, which led to the near
collapse of the bank in Malaysia were felt in Malaysia. But no prosecution was brought
in Malaysia in the belief that the Malaysian courts had no jurisdiction over the offences.
For the extradition proceedings, see R v Governor of Pentonville Prison, ex parte Osman
[1989] 3 All ER 701.The cost and delay involved have been great. The question of jurisdiction
becomes relevant to extradition as well for the courts of the extraditing state will have to
consider whether the state requesting extradition could properly claim jurisdiction. R v
Governor of Pentonville Prison, ex parte Naghdi [1990] 1 All ER 257. Extradition may
fail as some states refuse to extradite nationals. In the Liangsiriprasert case, the Thai national
who was alleged to be a drug-trafficker, was lured into Hong Kong and arrested by agents
there. Thailand, following the practice of some European states, does not extradite nationals.
7
[1990] 2 All ER 867.
8
R v Sansom, Times, 31 July 1990.
9
R v Atakpu [1993] 4 All ER 215 . The Court of Appeal held that there was no jurisdiction
to try a conspiracy to steal cars from a rental company in Belgium and drive them to England
for sale there. The crime was held to have been committed outside England. The territoriality
principle was affirmed by the Australian High Court with equal vigour in R v Thompson
(1989) (1989) 86 ALR 1. Earlier, the House Lords has asserted the territorial basis of criminal
jurisdiction in strong terms. In Cox v Army Council [1963] AC 48 at 67, Viscount Simon
had stated that the whole body of the criminal law of England deals only with acts committed
in England. The rule may be overridden by statute but even in the case of statute, there
is a strong presumption that it was intended to apply only territorially. Air India v Wiggins
[1980] 1 WLR 815.
10
There is now a bill before the House of Lords which seeks to deal with extraterritorial
jurisdiction over some property crimes including fraud. The Council of Europe also advocated
change in the area. See Council of Europe, Committee on Crime Problems, Extraterritorial
Crime Problems (1990). Also see D Lanham, Cross-border Criminal Law (1997).
11
Part 1 of the English Criminal Justice Act,1993 deals with the limited situation of crimes
involving fraud and fills a gap which had been created by some decisions in England which
had held that jurisdiction may be exercised if the fraud had been initiated abroad but took
effect in England but not with the converse situation where the fraud was thought of in
There have been no legislative formulation of general principles in recent
times which could guide courts on the issue of criminal jurisdiction.
One reason for preserving a restrictive rule on criminal jurisdiction is
that states may, when their interests require, seek to obtain illegal means
of acquiring jurisdiction. Thus, in the United States, the Supreme Court
has held that American courts could exercise jurisdiction over offenders
kidnapped from abroad.
12
Wide claims to jurisdiction on the basis of protecting
nationals living or travelling abroad have also met with critical responses.
13
Such techniques of obtaining jurisdiction will promote conflicts between
states.
The better course may be to explore avenues of extending criminal
jurisdiction in areas in which the mutual interests in the suppression of
crime may outweigh sovereign sensibilities that the enforcement may amount
to interference in the competence of the state where the offence was initiated
or committed.
14
In many instances such a state may not concern itself with
the crime either because the pursuit of the offender overseas was not possible
for economic or other reasons or because the primary effects of the crime
was not felt in the state itself. Policy should favour that the criminal be
punished by some interested state than that he should escape punishment
altogether.
A re-thinking in this area will require the changing of the accepted
principle that a state may not exercise its power in any form in the territory
of another state
15
and the corollary of this principle that the jurisdiction
England but took effect entirely abroad. The legislation is largely confined to commercial
crimes and does not give rise to any general rules on criminal jurisdiction.
12
US v Alvarez-Machain (1992) 112 S Ct 2188. The case has met with much criticism. In
June,1993, the governments of Mexico and the United States formally agreed to amend
the US-Mexico Extradition Treaty to prohibit transborder kidnapping. In South Africa and
England, courts have held that jurisdiction cannot be obtained through kidnapping of
offenders. See State v Ebrahim 1991 (2) SALR 2206.
13
US v Younis (1988) 681 F Supp 909; see for adverse comments, A Lowenfeld, US Law
Enforcement Abroad: The Constitution and International Law (1989) 83 AJIL 880;
Abramovsky, Extraterritorial Jurisdiction: The United States Unwarranted Attempt to
Alter International Law in United States v Younis (1990) 15 Yale Journal of International
Law 121.
14
Several years ago, Devlin J in Martin [1956] 2 QB 272 attempted a deviation from the
English position and suggested that offences such as murder and theft are offences against
the moral law and are not thought of as having territorial limits. They are universal offences.
This idea was scotched by the House of Lords in Board of Trade v Owen [1957] AC 602;
also see for Australia, Brennan J in Thompson (1989) 86 ALR 1 at 20.
15
SS Lotus [1927] PCIJ Series A, No 10 at 18.
of a state does not extend beyond the geographical boundaries of a state.
International society is organized on the basis of nation states and the interests
of these states in avoiding conflict have been served by maintaining the
principle of territoriality which confines the competence of states to their
territory.
16
There has been little reason to depart from this principle. In a
horizontal world system based on a fiction of equality of states, the rule
has served well to ensure harmony by confining competence over conduct
on strictly territorial basis.
17
But, expediency has required the making of
departures from a strict territoriality principle in the past. Whenever states
were threatened by a common problem, they resorted to the principle of
universality which gave all states jurisdiction over the offence regardless
of where it was committed. Piracy was the obvious example of this departure
but efforts to extend the list of offences in respect of which universal
jurisdiction can be exercised have generally been resisted.
18
Beyond piracy,
the list of crimes subject to universal jurisdiction extends to slavery, genocide
and certain types of war crimes.
19
Though there has been considerable
16
This principle was formulated in the heyday of positivism. There is no reason why it should
not now be leavened by having regard to the circumstances of modern international life.
Inroads have been made into this principle through developments in the field of human
rights, environmental laws and other areas.
17
The theory is that if a domestic court asserts jurisdiction over conduct in other states, it
upsets the horizontal system and converts it into a vertical system as it claims competence
over conduct occurring in the territories of other states. The notion of equality of states
can no longer prevail in these circumstances. The act of state doctrine and the sovereign
immunity plea are off-shoots of this idea. See for analysis along these lines, R Falk, The
Role of Domestic Courts in the International Legal Order (1964). There has been an erosion
of this notion of a perfect order through developments in fields like human rights. There
is an interesting view that states cannot complain with interference of their sovereign rights
if they permit their territories to be used for the violation of human rights. This view still
remains in the realm of idealism, F Teson.
18
The classic statement of the principles of international law on jurisdiction still remains the
Hague Lectures of Dr Mann. FA Mann, The Doctrine of Jurisdiction in International Law
(1964) Hague Recueil des Cours 1; Ibid, The Doctrine of Jurisdiction Re-visited after
Twenty Years (1984) 186 Hague Recueil des Cours 9. A useful collection of materials
on extraterritoriality is AV Lowe, Extraterritorial Jurisdiction: An Annotated Collection
of Materials (1983). A recent consideration of the issue of jurisdiction in relation to
transnational fraud is L Collins, Fraudulent Conduct in International Law [1989] 42
Current Legal Problems 255. Extension of jurisdiction to hijacking and terrorism are based
on treaty arrangements. For recent literature on the subject, see G Gilbert, Crimes sans
Frontieres: Jurisdictional Problems in English Law (1992) 63 BYIL 415; Report of M Bos
to the International Law Institute, The Extraterritorial Jurisdiction of States (1993) 65
Yearbook of the International Law Institute 14.
19
Slavery is included but despite wide condemnation, the authority for the exercise of universal
jurisdiction is sketchy. The candidacy of genocide and war crimes may also be doubted.
But, there is an increasing number of scholars who include them in the list of offences which
attract universal jurisdiction.
enthusiasm shown to graduate various crimes such as political terrorism,
drug trafficking and hijacking into the category of crimes justifying the
exercise of universal jurisdiction, more cautious observers have taken the
view that authority for such a view is meagre or non-existent.
20
The proposal
to create state responsibility for international crimes presupposes the liability
of individuals who committed them.
21
But, here again, the developments
are too hazy to be the focus of any definite law which could be developed
by domestic courts. Despite these developments, there will be a category
of offences which will not qualify for proscription as international crimes
simply because they do not receive the same degree of condemnation or
the same agreement among states as to their characterization as international
crimes.
It is unlikely that a category of offences ranging from drug trafficking
to transnational fraud would be subjected to universal jurisdiction, though
there may be an urgency to deal with such problems through collective
action of states. To take the example of fraud, there is little possibility of
states achieving any unanimity as to what offences should be classified
as amounting to the type of frauds

which

would justify the assumption of
jurisdiction on the basis of a principle of universal jurisdiction.
22
Given
this situation the possibility of extending the jurisdiction of individual states
remains a viable alternative that needs to be explored. This article examines
the possibility of using extraterritorial jurisdiction to deal with the problem
of extraterritorial crime. The article begins by showing that the traditional
hostility to extraterritoriality in many areas of the law has given place to
a position which seeks an accommodation brought about by the belief that
in certain areas of the law such extraterritoriality is either inevitable or is
desirable. This may lead to a re-thinking of the issue of extraterritoriality.
In the context of such re-thinking it may become possible to accept the
exercise of extraterritorial jurisdiction over transnational crimes at least to
a limited extent. Unlike in situations of civil jurisdiction, there is a shared
interest in the suppression of crime which is also supported by shared notions
of international morality which regards certain types of conduct as generally
reprehensible and worthy of punishment. The strong articulation of this
shared interest in morality and the suppression of crime will also facilitate
the extension of jurisdiction over transnational crimes, particularly if the
tension brought about by broad claims of extraterritoriality have begun to
20
R Higgins, Problems and Process: International Law and How We Use It (1994) p 58.
21
See, eg, LS Sunga, Individual Responsibility in International Law for Serious Human Rights
Violations (1992).
22
An instance is the situation of insider trading which was considered criminal by the United
States but European states were reluctant to treat it as criminal until recently.
abate. Secondly, it examines the trends within the Commonwealth to show
that Commonwealth courts are beginning to adopt tests relating to criminal
jurisdiction which are moving away from a stance of strict territoriality.
It then makes a short comparison with the position reached by the American
courts and the Commonwealth jurisdictions and suggests that a movement
towards the American position recognizing wider jurisdiction over transnational
crime may be desirable in the Commonwealth. There is also a consideration
of the constitutional ability of a Commonwealth state to legislate extra-
territorially and the need for the Commonwealth court to give as wide an
interpretation on legislation creating crimes so as to permit extraterritoriality
so as to facilitate the prosecution of transnational crimes. A final conclusion
is that a theoretical model other than one of total hostility to extraterritoriality
should be developed. The model should be capable of identifying areas
in which global interests could be furthered by the relaxation of the traditional
basis of jurisdiction based on territory.
23
The application of the model is
not confined to the Commonwealth. It should have universal validity.
II. EXTRATERRITORIALITY: THE RELAXATION OF HOSTILITY
Recognition of extraterritorial jurisdiction over transnational crime will
greatly facilitate the aim of controlling such crimes. Law reform agencies
recognize the inadequacy of jurisdiction based on territoriality to control
the growing incidence of such crimes. The English Law Commission, dealing
only with transnational fraud, pointed out that the modern rules governing
jurisdiction over dishonesty offences with a high foreign element should
be so framed as to take into account the high incidence of large scale fraud
committed across national boundaries and involving modern electronic and
other means of transferring money.
24
Reform of the law on criminal jurisdiction
was also suggested by the Canadian Law Reform Commission.
25
The Canadian
Commission favoured the extension of criminal jurisdiction to offences
committed abroad which produce effects within Canada. The European
Committee of Crime Problems also advocated a change in existing attitudes
to criminal jurisdiction on the basis of an international solidarity between
states in the fight against crime. The Committee stated that public in-
23
Existing theoretical discussions are based on the traditional hostility to extraterritoriality.
24
The Law Commission, Criminal Law: Jurisdiction over Offences of Fraud and Dishonesty
with a Foreign Element. (Law Commission No 180, 27 April 1989); Law Commission,
Criminal Law: Report on the Territorial and Exterritorial Extent of the Criminal Laws
(1979).
25
Law Reform Commission of Canada, Extraterritorial Jurisdiction (Working Paper 37,1989).
ternational law does not impose any limtations on the freedom of states
to establish forms of extraterritorial criminal jurisdction where they are based
on international solidarity between states in the fight against crime.
26
There
is a general consensus among agencies concerned with the reform of the
law that there should be a departure from the strict territoriality based
principle of jurisdiction.
It is not likely that the executive and legislative branches of the government
will accept these recommendations in full. They have had to bear the brunt
of conflicts created by the use of extraterritorial jurisdiction by the United
States in many areas of the law.
27
Courts, on the other hand, may be more
willing to move towards the acceptance of some form of extraterritorial
jurisdiction to cope with the increasing phenomenon of transnational crimes,
even though they may have to take nationalistic stances on other issues
relating to extraterritoriality.
28
A short survey of the state of the hostility
and conflict provoked by extraterritoriality is necessary to show that the
intensity of the conflict has not abated. As a result, the executive and the
legislative arms of the state may be averse to making changes to the existing
law through legislation because of the possibility of the resurgence of the
problems associated with the area in the past. It has been left to the judiciary
to devise an acceptable basis for the extension of jurisdiction. This cannot
be done in isolation but only with an understanding of all the areas in which
extraterritorial extensions of jurisdiction has been made and the nature of
the conflict that such extension has provoked.
Conflicts resulting from expansive claims to jurisdiction, particularly by
the United States, have led to the reassertion of the territoriality principle.
Much of the debate has focused on the American claim to enforce antitrust
laws extraterritorially on the basis of the effects doctrine formulated in the
Alcoa case.
29
The effects doctrine permitted a state to claim jurisdiction
26
European Problems on Crime Problems, Extraterritorial Criminal Jurisdiction (1990).
27
For materials on past conflicts, see AV Lowe, Extraterritorial Jurisdiction (1984).
28
Thus, the courts in England have consistently taken a view similar to the view taken by
the executive on issues relating to antitrust.
29
(1945) 148 F 2d 416 (2d Cir). There is extensive literature on the problem of antitrust
extraterritoriality. For works on the subject, see AD Neale and ML Stephens, International
Business and National Jurisdiction (1988); JG Castel, Extraterritoriality in International
Trade (1987). The Foreign Trade Antitrust Improvements Act ( 15 USC s6a 45 (a)3, 1988),
which now codifies antitrust extraterritorial jurisdiction, makes the Sherman Act inapplicable
to foreign commerce, unless there is a direct, substantial and reasonably foreseeable effect
on domestic or import commerce. For interpretations of this legislation, see Eurim-Pharm
GmbH v Pfizer Inc (1984) 593 F Supp 1102 (SDNY). Also see RP Alford, The Extraterritorial
Application of Antitrust Laws: The United States and European Community Approaches
(1992) 33 Va JIL 1.
over conduct which occurred outside the states territory but whose effects
were intended to be felt within its territory. There was vehement objection
by other states to this deviation from the principle of territoriality.
30
The
United States courts themselves sought a compromise by adopting a balancing
of interests test which required the American courts to balance the interests
of the United States in assuming jurisdiction over the conduct with those
of other states which may have interests affected by the exercise of such
jurisdiction.
31
This reaction may, of course, be taken as showing that there
is good cause to adhere to a position of strict territoriality in the hope that
the American judicial retreat may continue. In turn, there are dicta in English
cases which could be construed as acknowledging that the protection of
American interests may in some instances justify the exercise of certain
types of extraterritorial jurisdiction by American courts.
32
But, recent liti-
gation in the United States concerning practices within the British insurance
industry may stir up the old debate relating to the extent of antitrust jurisdiction.
33
The European hostility to antitrust extraterritoriality may become muted
30
The Westinghouse litigation drew protests from Britain, France and Australia.These states
also passed clawback legislation enabling recovery of treble damages paid in the United
States on the basis of orders made in cases where jurisdiction was exercised on the basis
of extraterritoriality. Protection of Trading Interests Act (UK,1980). AV Lowe, Blocking
Extraterritorial Legislation: The British Protection of Trading Interests Act (1981) 75 AJIL
257. The American response was that the clawback legislation was itself a piece of
extraterritorial legislation seeking to impose consequences on events that took place abroad.
31
Timberlane Lumber Co v Bank of America (1977) 549 F 2d 597 (9th Cir); Mannington
Mills Inc v Congoleum Corp (1979) 595 F 2d 1287 (3rd Cir); Industrial Investment
Development Corp v Mitsui (1982) 671 F 2d 876 (5th Cir). Recent indications are that there
will be a two stage analysis. First, jurisdiction will have to be established on the basis of
the direct, substantial and reasonably foreseeable effects test and next, there will be an
analysis on the basis of a balance of interests of factors indicated in cases like Timberlane.
32
The decision of the House of Lords in British Airways Board v Laker Airways Ltd [1985]
AC 58 may be seen as a judicial softening of attitudes but the Court of Appeal in Midland
Bank v Laker Airways [1986] 1 All ER 526 returned to a vigorous resistance to extraterritoriality.
See G Born, Recent British Responses to the Extraterritorial Application of United States
Law (1985) 26 Va JIL 91. A conflict between the United Kingdom insurance industry
is currently before the American courts.
33
Hartford Fire Insurance Co v California (1993) 113 S Ct 2891. Further see PM Roth,
Reasonable Extraterritoriality: Correcting the Balance of Interests (1992) 41 ICLQ 245.
34
Re Woodpulp Cartel [1988] 4 CMLR 901. Though some writers have argued that Woodpulp
did not adopt the effects doctrine, the assertion of jurisdiction over a cartel which had not
operated in the EC indicates that the effects test was adopted in that case. The European
Commission has advocated the adoption of the effects doctrine consistently; Dyestuffs Case
[1969] CMLR D23. R Whish Competition Law (1985) pp 267-268. JJ Friedberg, The
Convergence of Law in an Era of Political Integration: The Woodpulp Case and the Alcoa
Effects Doctrine (1991) 53 U Pittsburgh LR 289. It may be even argued that the European
as a result of the Woodpulp decision.
34
The European Court, though it did
its best to appear not to be accepting the effects doctrine, was formulating
rules of jurisdiction which commentators regard as coming very close to
that doctrine. The adoption of a US-EC Competition Laws Cooperation
Agreement which provides for consultation and cooperation in antitrust
matters of interest to both parties will ease the possibility of future conflicts
between the parties.
35
In the area of export controls, the previous attitude of hostility generated
by American efforts to prevent subsidiaries of American companies operating
abroad from selling products to enemy states
36
has been replaced by a growing
tendency to use the existing multilateral administrative machinery estab-
lished by the allied states which oversees such sales.
37
The failure of communism
in Eastern Europe and the growing trade with the remaining communist
states will diminish the significance of this area of conflict.
38
Hostility to extraterritoriality is maintained in several other areas. Thus,
in the case of efforts to freeze assets held in overseas branches of American
banks, there has been consistent opposition to American orders directed
at foreign branches of American banks.
39
The American view that its discovery
procedures could be used to collect evidence abroad have also led to allegations
Court now adopts a harsher effects test as there is no reference to a balancing of interests
as in the United States indicated in Woodpulp.
35
For text, see (1991) 30 ILM 1487.
36
The more celebrated instances involved the Fruehauf case involving France and the Soviet
Pipelines embargoes. The Dutch courts held that such embargoes did not have extraterritorial
effect and did not affect contracts made by subsidiaries of American companies incorporated
in Europe. Compagnie Europeene des Petroles v Sensor Nederland (1983) ILM 66. For
these instances, see JW Bridge, The law and Politics of United States Foreign Policy Export
Controls (1984) 4 Legal Studies 2; AV Lowe, Problems of Extraterritorial Jurisdiction:
Economic Sovereignty and the Search for a Solution (1985) 34 ICLQ 724 ; the recent
Toshiba incident was settled by the use of administrative procedures; see JW Morehead,
Controlling Diversion (1988) Nw J Intl L & Bus 277.
37
Ibid. On the need to reduce tensions in the area, see OECD, Minimizing Conflicting Requirements
(1987).
38
Trade with China is flourishing. The US embargo on trade with Vietnam has been all but
lifted.
39
For litigation in France concerning the freeze of Iranian assets, see Banque Centrale de
lEtat Iranien v City Bank, Paris (1980) JDI 330. For the consideration of the freeze orders
of Libyan assets by English courts, see Libyan Arab Foreign Bank v Bankers Trust Co
[1988] 1 Lloyds Rep 259. For a Hong Kong case concerning international banking, see
Nanus Asia Co Inc v Standard Chartered Bank [1990] 1 HKLR 396. Generally see R Cranston
(Ed), Legal Issues of Cross-Border Banking (1989).
40
WR Slomanson, The United States Supreme Court Position and the Hague Evidence
Convention (1988) 37 ICLQ 391; L Collins, The Hague Evidence Convention and
Discovery: A Serious Misunderstanding (1986) 35 ICLQ 765.
of encroachment on sovereignty.
40
But, while maintanining this general stance of hostility to extraterritorial
jurisdiction, both courts and legislatures within the Commonwealth have
begun to exercise jurisdiction which have extraterritorial features.
41
The
blocking statutes aimed at the use of antitrust extraterritoriality by the United
States have elements of extraterritoriality as they affect litigation that had
taken place overseas.
42
Antisuit injunctions issued by English courts against
antitrust litigation in the United States had the purpose of controlling conduct
outside the jurisdiction of the courts.
43
English courts have issued Mareva
injunctions that are to operate outside their jurisdiction.
44
The development
of a forum non conveniens doctrine by Commonwealth courts has explored
the circumstances in which jurisdiction may be exercised in disputes having
contacts with other jurisdictions. This judicial experience with extraterri-
toriality may lead to liberal views on legislation which has extraterritorial
effect and a greater readiness to extend the jurisdiction of the courts over
transnational conduct. In Australia, where much objection to extraterrito-
riality was generated as a result of the Westinghouse antitrust litigation,
some provisions of the Trade Practices Act have been given extraterritorial
effect.
45
Developing states of the Commonwealth, like India, have not shown
anxiety over extraterritoriality. Instead, they have used such extraterritoriality
on occasion to their advantage.
46
The Indian Supreme Court has ruled in
an early case, that a fraudulent crime initiated abroad but intended to have
41
In AG v Yeung Sun-shun [1987] HKLR 998, Roberts CJ said: We are not unsympathetic
to the view that the territorial basis of jurisdiction is becoming outmoded....
42
Thus in Aerospatiale v United States District Court for the Southern District of Iowa (1987)
482 US 107 at 554, the American Supreme Court said: Extraterritorial assertions of
jurisdiction are not one-sided. While the District Courts discovery orders arguably have
some impact on France, the French blocking statute asserts similar authority over acts to
take place in this country.
43
Thus, referring to the British antisuit injunction in the Laker Airways litigation, Judge Wilkey
said in Laker Airways Ltd v Sabena, Belgian World Airlines (1984) 731 F 2d 909 at 938:
...the English injunction seeks only to quash the practical power of the United States courts
to adjudicate claims under United States law against defendants admittedly subject to the
courts adjudicatory jurisdiction. For a survey, see TC Hartley, Comity and the Use of
Antisuit Injunctions in International Litigation (1987) 35 AJCL 487.
44
Eg, Babanaft International Co v Bassante [1989] 2 WLR 232. Also see L Collins, The
Territorial Reach of Mareva Injunctions (1989) 105 LQR 262.
45
Eg, Section 5(1); Green v Australian Investment Ltd (1989) 90 ALR 500.
46
In Pfizer Corp v India (1978) 434 US 308, the Government of India successfully argued
that price-fixing in India by the drug company was a violation of the Sherman Act. The
litigation concerning the Bhopal disaster was brought in the United States.
47
Mobarak Ali Ahmed v State of Bombay AIR 1957 SC 857.
effects in India, is subject to the jurisdiction of the Indian courts.
47
Despite the conflict that remains, the picture on extraterritoriality has
changed rapidly. It is coming to be recognized that the exigencies of multinational
business now demand a relaxation of the traditional principle of territoriality.
The ambivalence towards the conflict in the area will mean that courts may
be able to extend extraterritorial jurisdiction without too much restraint.
There is indication that the courts in the Commonwealth are cautiously
moving toward the acceptance of a theory that will favour the use of
extraterritorial jurisdiction over transnational fraud. Whereas courts may
be willing to go towards accepting extraterritoriality in limited instances,
there will be greater cautiousness displayed by the executive or the legislature
towards such extensions.
48
III. EXTRATERRITORIAL CRIMINAL JURISDICTION AND
THE COMMONWEALTH COURTS
The traditional view of the courts in the Commonwealth has been that criminal
jurisdiction is based on territoriality. The common law position that criminal
jurisdiction was confined within the territorial jurisdiction of the courts,
49
is stated in the Commonwealth penal codes.
50
Common law courts construe
legislation of other states as also limited to their territories.
51
The dominance
of territoriality as the basis of jurisdiction has continued to hold sway in
the Commonwealth despite the need for extending jurisdiction in the face
of the increasing phenomenon of transnational crimes.
However, courts gradually extended jurisdiction over crimes which were
48
This may explain the cautiousness displayed in the Bill presently before the House of Lords.
It does not take the law as far as it has been taken by the Privy Council in Liangsiriprasert
v United States Government [1990] 2 All ER 867.
49
R v Kohn (1864) 4 F & F 68; Air India v Wiggins [1980] 1 WLR 815; Holmes v Bangladesh
Biman Corp [1989] AC 1112; Liangsiriprasert v United States Government [1990] 2 All
ER 867. For Australia, see Jumbunna Coal Mine v Victorian Coal Miners Association (1908)
6 CLR 309 at 363; Anderson v R (1987) 117 ALR 1.
50
See s 2 of the Malaysian and Singapore Penal Codes. For a recent assertion of the territorial
basis of jurisdiction by the Malaysian courts, see Public Prosecutor v Rajappan [1986] 1
Malaysian Current Law Journal 175. But Indian courts have read the same provision as
giving extraterritorial jurisdiction to the courts in some instances. Mobarak Ali Ahmed v
State of Bombay AIR 1957 SC 857. In Canada, the current trend appears to take a much
wider view of territoriality. SJ Whitley, Jurisdiction in Criminal Law (1985) at 51. Also
see Libman v R (1985) 21 DLR (4th) 174.
51
Wiiliams and Humbert Ltd v W & H Trademarks Ltd [1986] 1 WLR 129.
52
There was some debate whether the courts used initiation or termination of the crime as
the relevant criterion. G Williams, Venue and Ambit of the Criminal Law (1965) 85 LQR
276,395,518. But, termination is seen as the more relevant criterion. See the South Australian
decision, Collins (1987) 42 SASR 47.
initiated abroad but terminated within the jurisdiction of the courts.
52
The
justification possibly lay in the fact that the state in which the crime terminated
had a greater interest in its prosecution. Another technique that was developed
to deal with crimes which commenced elsewhere but terminated within the
jurisdiction of the courts was to use the continuing nature of the act involved
in some crimes and regard the actus reus of the offence as continuing within
jurisdiction though commenced elsewhere.
53
The definition of conspiracy
as such a continuing offence enabled courts to assume jurisdiction over
conspiracies to defraud which were formed overseas but were intended to
be effected within the jurisdiction.
54
A policy justification that has been
advanced is that crimes such as conspiracies are inchoate crimes, the purpose
behind which is the protection of peace. That being their object, it makes
little difference where the conspiracy was formed provided it was intended
to take effect within jurisdiction.
55
But jurisdiction has been denied in the
converse case where the conspiracy was formed within jurisdiction to commit
an offence overseas.
56
There was a great reluctance to depart too radically
from the territoriality principle. A theoretical justification was provided for
the latter deviation by making a distinction between result crimes and conduct
crimes.
57
A conduct crime consists of specified prohibited act on the offenders
part, irrespective of its consequences. In the case of such crimes, a court
has jurisdiction only if the conduct takes place within jurisdiction. A result
crime consists not only of the specified conduct but also of its consequences.
In the case of result crimes, it was suggested, at least by Lord Diplock,
that it would be sufficient if either the conduct or the consequences occur
within England for English courts to have jurisdiction. But, in cases involving
obtaining by deception, which is a classic instance of a result crime, English
courts have not been prepared to accept this view. In these cases, there
has been some insistence in showing that there was obtaining of property
53
Lawson v Fox [1974] AC 803.
54
Doot [1973] AC 807.
55
Lord Griffiths in Liangsiriprasert v United States Government [1990] 2 All ER 867.
56
Board of Trade v Owen [1957] AC 602 followed in R v Tomsett [1985] Crim LR 369; R
v Nanayakkara [1987] 1 WLR 265. But, the decision did not prevent a Jamaican court from
punishing such a conspiracy. On appeal, the Privy Council did not decide the issue, finding
a Jamaican statute which could be used to convict the accused. James Smith v The Queen
(Privy Council Appeal 7 of 1992, decided on 26 October 1992).
57
The basis of the distinction is to be found in the text on Scottish criminal law, Gordon,
Criminal Law of Scotland (2nd Ed,1972). AJ Arlidge and J Parry, Fraud (1985) pp 279-
285.
58
Harden [1963] 1 QB 8; Tirado (1974) 59 Cr App R 80; Khubchandani (1980) 71 Cr App
R 241.
within England, though the deception may have taken place elsewhere.
58
The subtlety of the distinctions made in these cases show that the courts
do feel the need to depart from territoriality as the basis of jurisdiction
but are constrained by doctrine. In Harden,
59
the hoary postal acceptance
rule was used to justify the view that an acceptance of a fraudulent offer
made in England by the posting of a cheque in Jersey made the crime of
deception complete in Jersey at the moment of the posting of the cheque.
The result was that the English courts did not have jurisdiction over the
offence.
60
Later courts have not been too impressed by the rigid analysis
made in Harden and have preferred to confine the effects of that case.
61
It may have been preferable to have accepted boldly the change that Lord
Diplock sought to make. Instead, English courts which were convinced of
the need to assume jurisdiction over transnational frauds continued to justify
such assumptions of jurisdiction in a manner consistent with the territoriality
principle. In doing so, they stretched logic to the extremes and GAVE rise
to nice debates as to whether the particular crime involving fraud was one
which depended on the effect it had on the victim or third parties for their
completion. Several techniques have been used to rationalise extensions
of jurisdiction with the territoriality principle.
One technique was to use some act that takes place within England as
that of an agent and assume jurisdiction on the basis that there was some
part of receiving by means of deception or part of an act involving the
conspiracy to defraud committed in England through agency. Thus, in
Markus,
62
the deception was on West German investors who had handed
over their money in Germany. The House of Lords focussed on the processing
of the applications of the investors which was done in London. It held that
the company was an agent of the investors and that acts in connection with
the fraud had been performed in England. The case shows that it would
be sufficient to assume jurisdiction if a part of the actus reus, a not too
necessary part, was committed in England even by an agent. It is consistent
with existing theory to exercise jurisdiction if some part of the act took
place within jurisdiction. At times, the English courts have used rather
circuitous reasoning in order to find jurisdiction over the offender. In Bevan,
63
the accuse had obtained guarantees for his overdrawn cheques by using
his gurantee card. The cheques were presented in Belgium and France. The
court held that there was jurisdiction on the ground that the crime was
59
Supra, note 30.
60
See also Baxter [1972] 1 QB 1.
61
Tirado (1974) 59 Cr App R 80.
62
[1976] AC 35.
63
(1986) 84 Cr App Rep 143.
completed in England when the cheques were presented to the English bank
for payment by the foreign banks which had cleared them. The result of
the crime took place in England. The New Zealand Crimes Act has a provision
which confers jurisdiction provided a part of the actus reus was committed
within jurisdiction. Some artificial notion, like the final act committed by
an agent within jurisdiction, is resorted to in order to found jurisdiction.
It may not be necessary to resort to notions of agency to rationalise such
a position with the territoriality principle. Yet, the use of the agency principle
is coming to be generally accepted in many common law jurisdictions. In
a Hong Kong case, AG v Yeung Sun-shun,
64
where a conspiracy to export
elephant tusks from Macau into Hong Kong, contrary to the Export Ordinance
of the colony was involved, the assistant purser of the ship which transported
the tusks was a party to the conspiracy. The Court of Appeal of Hong Kong
held that though the conspiracy was formed in Macau, the Hong Kong courts
had jurisdiction as the master of the ship was an innocent agent and the
assistant purser was a guilty party and they participated in the performance
of the conspiracy within jurisdiction. Roberts CJ also stated that the court
was not unsympathetic to the view that the territorial basis for jurisdiction
is being outmoded.
65
Lord Diplock, however, adopted a more realistic and novel approach
to the problem of criminal jurisdiction. He pointed out that the territoriality
principle had its historical origin in the jury trial where the accused was
tried by knowers of facts and were drawn from the locality in which
the crime was committed. The historical reason for the rule had lapsed and
there was no need to be constrained by the rule in modern times. The only
restraint in modern law was that imposed by international law. The only
limiting factor in international law was the notion of international comity
which required that the assumption of jurisdiction should be reasonable
in situations where there was a possibility of another state assuming ju-
risdiction over the same incident. He coupled this idea of international comity
with the notion of result crimes to arrive at the view that in result crimes,
64
[1987] HKLR 987. Compare Stonehouse [1975] AC 55 where the wife would have acted
as an innocent agent in claiming insurance. Also see R v Beard [1974] 1 WLR 1549. For
Australia, see White v Ridley (1978) 140 CLR 342; R v Skewes (1981) 7 A Crim R 276.
An old case, Brisac (1803) 4 East 154 is used to support the theory of agency, the judge
there holding that the agents were mere instruments in the hands of those who formed
the conspiracy outside jurisdiction.
65
The Chief Justice referred to Treacy v DPP [1971] AC 537, the Canadian case, Libman
v R (1985) 21 DLR (4th) 174 and the Zimbabwean case, Mharapara v The State [1986]
LRC (Const) 235.
where the offender commits acts in one country and the consequences of
the act are to occur in another country, the latter country would be acting
in conformity with international comity if it exercised jurisdiction over the
offender.
66
Yet another approach was the acceptance of a doctrine similar to the
effects doctrine at least in criminal cases. This approach is evident in the
dicta of Lord Keith in the Stonehouse case.
67
Lord Keith sought to justify
the assumption of jurisdiction in that case on the ground that the acts of
the accused had effects which were intentionally felt in England. The
use of the word effects may be unfortunate for it would appear to be
an acceptance of the effects doctrine formulated in the Alcoa case. There
is reference to effects in the Criminal Justice Bill currently before the
House of Lords.
68
In the past, the United Kingdom has resisted the use
of the effects doctrine as a basis of jurisdiction, at least in antitrust matters.
It may be that there is, at least, a subconscious acceptance of the relevance
of effects at least to criminal jurisdiction.
There does not appear to be much of a difference in the approaches of
Lord Keith and Lord Diplock.
69
They both concentrate on the effects within
jurisdiction of the acts done abroad. Lord Diplock seeks to identify result
crimes as the ones capable of producing such effects and adds the cautionary
principle that international comity should provide limits for the exercise
of the jurisdiction even where such effects are felt within jurisdiction. To
the extent, that it is more precise and avoids comparison with the American
effects doctrine, the formulation of Lord Diplock may seem the better one.
IV. AMERICAN VIEWS ON EXTRATERRITORIAL CRIMINAL JURISDICTION
(1) General Criminal Jurisdiction
English courts have sometimes referred to American decisions to justify
positions they have taken on the issue of criminal jurisdiction.
70
But, it is
evident that American courts assume jurisdiction on the basis of more
expansive notions of jurisdiction than those used by the English or Com-
66
Eg, in DPP v Stonehouse [1978] AC 55 at 67.
67
[1978] AC 55 at 93.
68
S 3(3) b of the Criminal Justice Bill (1992).
69
For the suggestion that there is, see Lord Griffiths in Liangsiriprasert v United State
Government [1990] 2 All ER 867 at 876.
70
See, eg, R v Baxter [1972] 1 QB 1 at 13 where Sachs LJ said that it is not without interest
to note that the decision of this court today accords in essence with one reached in the United
States as long ago as 1893...
monwealth courts. To some extent, their more liberal views on jurisdiction
are facilitated by the fact that they deal with statute based criminal law.
The principles of statutory interpretation the American courts use enable
them to guess the intention of the legislature and give an interpretation
which accords with such an intention. Often, it is possible to pass off the
courts views as to the object of the legislation as the intention of the
legislature. Penal Codes in American jurisdictions entrench this attitude by
stating the grounds of jurisdiction in a liberal fashion.
71
Some lip service is paid to the principle of territoriality in that is recognised
that a criminal statute will be construed ordinarily as applying only to crimes
committed within the territory.
72
But, courts have generally shown a willingness
to infer extraterritoriality on the basis of the presumed intention of the
legislature.
73
The general approach in the United States parallels the approach
of Lord Diplock that extraterritorial jurisdiction is permissible if international
law permits it and that the only restrictions on such jurisdiction are to be
found in the rules of international comity. The understanding of the American
courts of the permissible basis of jurisdiction are stated in the following
oft quoted passage:
Under international law, a state does not have jurisdiction to enforce
a rule of law enacted by it unless it has jurisdiction to prescribe.
International law recognises five general principles whereby a sovereign
may exercise this prescriptive jurisdiction: (1) territorial, wherein
jurisdiction is based on the place where the offence is committed; (2)
national, wherein jurisdiction is based on the nationality or the national
character of the offender; (3) protective, wherein jurisdiction is based
on whether the national interest is injured; (4) universal, which amounts
to physical custody of the offender, and (5) passive personality, wherein
jurisdiction is based on the nationality or national character of the
victim.
74
71
See, eg, s 1.03 of the Model Penal Code.
72
US v Bowman (1922) 260 US 94.
73
Skiriotes v Florida (1941) 313 US 69; US v Cotten (1973) 471 F 2d 744 (9th Cir); Stegemann
v US (1970) 425 F 2d 984 (9th Cir); US v Layton (1988) 855 F 2d 1388 (9th Cir).
74
US v Smith (1982) 680 F 2d 255 (1st Cir); the five bases of jurisdiction are based on the
Harvard Research in International Law, Jurisdiction with Respect to Crime (1935) 29
AJIL Spec Supp 435 at 445. In substantially similar form, these heads of jurisdiction are
repeated in s 402 of the Third Restatement; American Law Institute, Restatement of the
Law: Foreign Relations Law of the United States (1987) p 237. US v Pizzarusso ( 1968)
388 F 2d 8 at 10.
Since American courts perceive extraterritorial jurisdiction as being permitted
provided such jurisdiction could be justified on the basis of the five grounds
of jurisdiction, they have been able to claim wide jurisdiction. The principal
instance in which such wide extraterritorial jurisdiction has been claimed
in the field of criminal law is the prosecution of drug offenders.
75
But the
propositions are stated as general propositions in these cases and are not
confined to the prosecution of drug offenders. They will have a tendency
to be established as general propositions. There is wide jurisdiction claimed
also on the basis of the nationality of the victim in the case of violent crimes
directed at Americans abroad. This type of jurisdiction is claimed on the
basis of the passive nationality principle and though it is extraterritorial
in a sense, it is best to assign it to a distinct category and confine discussion
here to the situation where a crime is committed abroad but produces and
is intended by its perpetrators to produce effects within the jurisdiction of
the United States.
A justification advanced for such extraterritorial criminal jurisdiction
takes the form of an objective territoriality principle.
76
A dictum of Holmes
J in Strassheim v Daley,
77
is used to define the acts covered by the doctrine.
It reads:
Acts done outside the jurisdiction, but intended to produce and producing
detrimental effects within it, justify a State in punishing the cause of
the harm as if he had been present at the effect, if the State should
succeed in getting him within its power.
The protective principle and the objective territoriality principle have been
used to obtain wide jurisdiction, particularly over conspiracies involving
drug trafficking. The distinction between the two theories is that the protective
theory provides jurisdiction if the offence affects governmental interests
even without the need to prove effects within the United States, whereas
75
US v Smith (1982) 680 F 2d 255 (1st Cir) Chua Han Mow v US (1984) 730 F 2d 1308
(9th Cir). Also see US v Gonzalez (1985) 776 F 2d 931 where the court justified the use
of jurisdiction over drug trafficking on the high seas on the protective principle and state
that such jurisdiction extended to such an extent and to so great a distance as is reasonable
and necessary to protect itself and its citizens from injury. RR Churchill and V Lowe,
Law of the Sea (1988) p 175 state that for the moment the legality of the claims must
remain highly controversial.
76
Chua Han Mow v US 730 F 2d 1308 at 1312.
77
(1911) 221 US 280.
78
Pizzarusso 388 F 2d at 11.
for the objective territoriality principle such effects have to be shown.
78
The finding of a conspirator within jurisdiction has also enabled the courts
to use agency principles and attribute acts of the agent to the other members
of the conspiracy and justify jurisdiction on the basis of territoriality.
79
This
technique is similar to the one used in the English and Hong Kong cases
discussed above.
80
But, there is a tendency in recent cases to dispense with
the need for such agency.
81
These cases suggest that producing effects within
jurisdiction or having an intention to do so will be sufficient. They do not
require the commission of any act within jurisdiction.
Another technique that is used, reminiscent of the use of the notion of
result crimes in English law, is the idea that the actus reus of certain offences
have a continuing character. In English law, this idea has principally been
used in connection with charges of conspiracy, the offence held to be
continuing, though formed entirely abroad, and the territoriality principle
being held to be satisfied where some act, however trivial, is performed
within jurisdiction, or where no act takes place, but there is an intention
to cause effects within the territory.
82
This technique is easier to adopt in
American law as the statute defining the offence itself will usually indicate
the continuing character of the offence.
83
This development parallels the
view of Lord Diplock that in result crimes, jurisdiction could be exercised
if one or more of the acts involved in the crime take place within jurisdiction.
(2) Extraterritoriality and Fraud
The broad bases of criminal jurisdiction stated in the drug cases have
been used in cases involving criminal fraud as well.
84
The obtaining of an
American passport by supplying false information at an American consulate
abroad was held to be a fraud triable in the United States on the basis of
the protective principle as it affected governmental interests. Here, effects
within the United States need not be shown. As governmental interests need
79
Ford v US (1927) 273 US 593; Winter v US 509 F 2d 975 (5th Cir); Chua Han Mow v
US (1984) 730 F 2d 1308 (9th Cir); US v Alvarez-Mena (1985) 765 F 2d 1259 (5th Cir).
80
AG v Yeung Sun-shun [1987] HKLR 987 and Stonehouse [1975] AC 55.
81
US v Postal (1979) 588 F 2d 862; US v Angola (1981) 514 F Supp, 933 (SDS Fla); SE
Chilberg, The Contours of Extraterritorial Jurisdiction in Drug Smuggling Cases (1983)
5 Mich YB Intl Leg Studies 43.
82
Thus, in Liangsiriprasert [1990] 2 All ER at 878, Lord Griffiths said: Their Lordships
can find nothing in precedent, comity or good sense that should inhibit the common law
from regarding as justiciable in England inchoate crimes committed abroad which are
intended to result in the commission of criminal offences in England.
83
US v Mancini (1989) 882 F 2d 401 (act of mailing does not complete crime where the
agreement was to send pornography from Italy).
84
Eg, US v Columba-Collela (1979) 604 F 2d 357 (5th Cir).
to be affected for the use of the protective principle, such effects are presumed
once it is shown that the conduct harmed such interests.
85
So too, fraud
involving the disbursement of social security cheques drawn on the United
States Treasury taking place in Mexico was held to be subject to American
jurisdiction.
86
The justification for such jurisdiction was that detrimental
effects were produced within American jurisdiction, preventing the normal
disbursement of social security funds to those lawfully entitled to receive
such funds.
87
Fraud involving transnational banking transactions have been dealt with
in various ways. Since such frauds would usually involve telecommuni-
cations facilities in the United States, statutory provisions which prohibit
such use in interstate or foreign commerce become an obvious ground of
jurisdiction.
88
The notion of conspiracy has also been given a wide meaning
and it has been held that as long as acts relating to the conspiracy take
place within the United States, even those conspirators who do not enter
the United States are subject to the jurisdiction of the American courts.
89
In frauds involving cheques, it has been held that where a cheque used
abroad had to be cleared within the United States by a bank, jurisdiction
could be assumed. In Braverman,
90
counterfeit money orders drawn on an
American bank were cashed in Brazil. The court assumed jurisdiction on
the ground that they had to be paid ultimately in Brooklyn, New York
and referred to the dictum in Strassheim v Daley
91
concerning effects produced
within jurisdiction in support. English courts would probably assume jurisdiction
in similar cases by relying purely on the territoriality doctrine, focussing
on the last act of clearance by the bank on which the fraudulent cheques
were drawn.
92
In some cases, an effort has been made to retain an element of theoretical
purity. Thus, occasionally, the need for some nexus between the United
85
US v Fernandez (1974) 496 F 2d 1295 (5th Cir).
86
US v Pizzaruzzo (1968) 388 F 2d 8 (2d Cir); Rocha v US (1961) 288 F 2d 545 (9th Cir);
US v Khalje (1981) 652 F 2d 90. Compare Nanayakara, where English courts refused
jurisdiction over a conspiracy to use such cheques formed in England on the ground that
the offence was to be committed overseas.
87
Fernandez 496 F 2d at 1296.
88
18 USC s 1343; US v Gilboe (1982) 684 F 2d 235 (2d Cir); US v Goldberg (1987) 830
F 2d 459 (3rd Cir); US v Amrep Corp (1976) 545 F 2d 797 (CANY).
89
US v Inco Bank & Trust Corporation (1988) 845 F 2d 919 (11th Cir).
90
Supra.
91
See text at note 49.
92
As in Stonehouse, it could be argued that it was necessary part of the conspiracy that acts
should take place in Britain. Compare Bevan (1986) 84 Cr App Rep 143.
States and the crime has been asserted. In Columba-Colela, there was a
fraudulent scheme to sell cars stolen in the United States in a Mexican
border town. The court refused jurisdiction over the fraud on the ground
that there was no effect of the crime within the United States. The court
cautioned against the drawing of an artificial nexus or effect like the American
owners being unable to recover the cars. In Evans,
93
where there was a
fraudulent evasion of the Export Control Act involving the sale of American
equipment situated abroad to an Iranian buyer, the court upheld jurisdiction
even though the whole transaction took place abroad but such a decision
is explicable on the basis that the whole purpose of the legislation was
to operate extraterritorially to prevent American products reaching enemy
hands.
(3) An Assessment
American courts have generally adopted a functional approach to the
problem of criminal jurisdiction often sacrificing theoretical purity in order
to justify the assumption of jurisdiction over offences committed overseas.
94
In most cases, such an assumption of jurisdiction has been over nationals
so that the nationality principle could be used to buttress the extensive claims
made on the basis of the objective territoriality principle.
95
Most of the
offences in which extensive jurisdiction has been claimed also involve drug
offences in the suppression of which states share a common interest and
hence protests are unlikely. In fact there has been extensive cooperation
in the field, states showing a great readiness to extradite offenders to stand
trial even in situations where extraterritorial jurisdiction is involved.
96
In
fields such as drug trafficking and other drug related offences, conflict will
not be generated by wide extraterritorial claims as there is a shared interest
93
(1987) 667 F Supp 974 (SDNY).
94
See generally CL Blakesley, United States Jurisdiction over Extraterritorial Crime (1982)
J Crim Law & Criminology 1108.
95
Eg, in US v King (1976) 552 F 2d 833 (CA Cal), jurisdiction was established over sale
of heroin in Japan by nationals. In US v Brown (1977) 549 F 2d 954 (CA Md) jurisdiction
was established over a conspiracy to import drugs into the States from Germany by American
nationals.
96
Thus, eg, the accused in Chua Han Mow 730 F 2d 1308, was extradited from Malaysia
for a conspiracy formed in Malaysia to export drugs into the United States. He was perhaps
lucky that the Malaysian courts adopt a strict territoriality principle as there is capital
punishment for drug offences in Malaysia. Compare Liangsiriprasert [1990] 2 All ER 866
where the Thai authorities cooperated with the US authorities in the arrest of their national
in Hong Kong.
in the suppression of such activity which finds expression in international
conventions. Thus, referring to the trafficking in drugs and the exercise
of jurisdiction, Lord Salmon observed in Doot:
97
I do not believe that any civilized country, even assuming that its
own laws did not recognize conspiracy as a criminal offence, could
today have any reasonable objection to its nationals being arrested,
tried and convicted by English courts in the circumstances to which
I have referred. Today, crime is an international problem perhaps
not least, crimes connected with illicit drug traffic and there is a
great deal of cooperation between nations to bring criminals to justice.
The dictum is certainly true as far as drug-related offences are concerned.
But, though fraud may be widely considered as morally reprehensible,
98
there may not be the same shared interest in its suppression as other interests
may come into conflict. Thus, a ready acceptance of another states exercise
of extraterritorial jurisdiction may require the granting of access to business
documents or the waiver of bank secrecy laws. Yet, the American courts,
though conscious of the difficulties, are inching towards finding a solution
which takes transnational frauds to a situation akin to that which exists
in the case of drug related offences. Such a situation, to a large extent
coincides with American national interests as is evident in the case of
securities fraud where the exercise of wide jurisdiction followed by a discreet
caution indicates American perceptions of the problem of jurisdiction over
fraud more clearly.
V. JURISDICTION OVER SECURITIES FRAUD
Statutes on securities frauds which were enacted in the United States during
the Great Depression were clearly intended to deal with domestic problems
involving fraudulent share transactions leading to bankruptcies of small
investors.
99
Willful violations of all federal securities legislation is criminal,
97
DPP v Doot [1973] 1 All ER 940. Compare US v Gonzalez (1985) 776 F 2d 931 where
the court in exercising jurisdiction over drug smuggling on the high seas, justified the
extension of the jurisdiction on the ground that such conduct is generally recognised as
a crime under the laws of states that have reasonably developed legal systems.
98
That opinions could differ is shown by the fact that it took a long time for Europeans to
come to terms with the idea that insider trading could be criminally fraudulent.
99
Leasco Data Processing Equipment Corporation v Maxwell (1972) 468 F 2d 1326.
100
L Loss, Securities Regulation (Vol 3, 1961) pp 1984, 2013.
though civil damages could be had in respect of such violations.
100
As far
as jurisdiction under them is concerned there is no difference made between
civil and criminal jurisdiction.
101
Though the cases discussed have involved
civil jurisdiction, since civil and crimininal jurisdiction are coterminous in
this area, the cases on civil jurisdiction serve to illustrate the extent of criminal
jurisdiction as well. It is relevant to note that the more modern statutes
within the Commonwealth on securities regulation specifically provide for
extraterritorial operation.
102
Early cases acknowledged that the fraud pro-
scribed by the statutes had a clear territorial base.
103
But, by 1968, American
courts had switched this position and held that where the fraud related to
stocks of foreign corporations listed on American stock exchanges, the
American courts could exercise jurisdiction even if the foreign corporations
did no business within the United Sates. This result was reached in the
seminal decision, Schoenbaum v Firstbrook.
104
A limitation was that the
transactions should have been detrimental to American investors.
But as the courts found that share transactions abroad were affecting
stock exchanges in the United States and American citizens, they reached
an intermediate stage in which artificial reasoning was often used to find
that some act in connection with the fraud took place in the United States.
Two techniques were used in the cases which constitute this intermediate
stage. First is the use of the nationality doctrine as the basis of jurisdiction
and the assertion that where fraudulent transactions affected American
citizens, American courts would assert jurisdiction wherever the transaction
took place.
105
The protection of citizens or the passive personality principle
on which this step is based does have support in international law. A second
technique was to find jurisdiction on the basis that the participants in the
fraud had used American postal and telecommunications facilities for effecting
the fraud.
These cases contained expansive bases of jurisdiction and in a series
of decisions made by Judge Friendly, an effort was made to chart out a
more precise formulation of jurisdictional principles to be applied in such
101
Further see Section 416 and commentary on the section in the American Law Institute,
Restatement of the Law Third: The Foreign Relations Law of the United States (Vol 1, 1987)
pp 295-303.
102
Eg, see ss 123 & 124 of the Australian Securities Industries Code and s 1 of the Australian
Companies (Acquisition of Shares) Code CAC v National Nominees (1982/83) 8 ACLC
1038.
103
Eg, Kook v Crang (1960) 182 F Suppl 388 (SDNY).
104
(1968) 405 F 2d 200 (2d Cir).
105
SEC v Gulf International Finance Corporation (1964) 223 F Supp 987 (SD Fla); SEC v
United Financial Group Inc (1973) 474 F 2d 354 (9th Cir).
cases. Firstly, there was a rejection of the view that an extensive effects
doctrine should be applied in the area. Leasco Data Processing Equipment
Corporation v Maxwell
106
signalled a return to territoriality at least as the
starting premise of analysis. In this case, Judge Friendly stated that if all
the fraudulent acts in respect of the sale of the stocks of an English company
had taken place in England, serious doubts would be entertained as to
whether the securities legislation would be applicable simply because of
the adverse effect of the fraudulently induced purchases in England of
securities of an English corporation, not traded in an organized American
securities market, upon an American corporation whose stock is listed on
the New York Stock Exchange and its shareholders. But the judge went
on to say that if there had been significant conduct within the territory,
then jurisdiction may be assumed. In Bersch v Drexel Firestone Inc,
107
jurisdiction was declined as the transactions involved were predominantly
foreign.
But, in IIT v Vencap,
108
Judge Friendly ruled that the American courts
would assume jurisdiction to prevent the United States being used as a base
for fraudulent securities schemes even when the victims are foreigners, a
holding which goes beyond any case yet decided.
109
But the judge also
held that jurisdiction should not be extended to cases where the United
States activities are preparatory or take the form of culpable neonfeasance
and are relatively small in comparison to those abroad. The court held
that a lower threshold of preparatory acts done in the United States may
be sufficient if Americans abroad had been harmed.
110
There is an effort
in these judgments to limit the wide claims of jurisdiction that had been
previously made. The limitation is based on the primacy of the territoriality
doctrine, with exceptions being made where there were substantial effects
of the fraud on the American investors or the American economy.
Even the limited attempt at cautiousness shown by the Second Circuit
was discarded in later cases. This may have been due to the concern that
securities frauds were arousing globally and the vision that the American
106
(1972) 468 F 2d 1326 (2d Cir).
107
(1975) 519 F 2d 974 (2d Cir).
108
(1975) 519 F 2d 1001 (2d Cir).
109
In a later decision, SEC v Kasser (1977) 548 F 2d 109 (3rd Cir), Judge Adams asserted
a similar proposition in more spectacular language: We are reluctant to conclude the
Congress intended to allow the United States to become a Barbary Coast as it were,
harbouring international securities pirates.
110
There is of course, no basis for this exception. The protective principle justifies protection
of national or governmental interests and the nationality principle justifies exercise of
jurisdiction over nationals who commit crimes whilst abroad.
courts had the function of policing such frauds. As the securities markets
were becoming globally integrated and the United Sates markets were
becoming the leaders of the world markets, the American courts responded
by departing from the territoriality principle and accepted more expansive
bases of jurisdiction. A newer line of cases began to emerge in which the
protection of the reputation of the American markets from both local and
foreign manipulators became the concern of the courts.
111
The fact that these
markets could be manipulated by electronic and other speedy means without
the offender setting foot within the United States also justified the use of
expansive doctrines.
112
Thus, in Continental Grain, the securities transaction was in respect of
an Australian company and the victims of the fraud were Australian nationals.
Some conduct took place in a lawyers office in New York and this provided
the only contact with the United States.The stocks of the Australian company
were not registered in the American exchanges. The Eighth Circuit Court
of Appeals held that the mere use of mail and telecommunications facilities
in the United States to make misrepresentations as to the continuation of
existing licensing arrangements was sufficient to provide jurisdiction. There
was also justification provided on the basis of forum non conveniens as
the victim was prepared to litigate the matter in the United States and the
defendant resided in the United States. The court recognised that the decision
was largely based on policy considerations. It articulated three distinct
policy grounds:
(1) the denial of jurisdiction would embolden those who wish to
defraud foreign securities purchasers or sellers to use the United
States as a base of operations;
(2) concern with the prospect of unfavourable reciprocal responses
by other nations and the hope that the exercise of jurisdiction
would lead to effective anti-fraud enforcement internationally;
(3) the belief that the finding of jurisdiction was consistent with
Congressional intent to elevate the standard of conduct in se-
curities transactions.
Decisions, principally of the Ninth Circuit, have sought to advance the
111
Eg, SEC v United Financial Group Inc (1973) 474 F 2d 354.
112
See Note, American Adjudication of Transnational Securities Fraud (1976) 89 Harv LR
553 at 565.
policies underlying the Federal securities laws and expand jurisdiction in
this manner.
113
During this expansive period, the official quarters were toying
with a theory that would justify the assumption of extensive jurisdiction.
This theory had it that if there was any direct or indirect trade done through
any American exchange, there must be implied from this conduct a waiver
of any objection to the exercise of jurisdiction over the transaction by an
American court.
114
The idea has since been given up which itself may indicate
that there has been a change of approach to extraterritorial jurisdiction over
securities frauds in favour of more cooperative endeavours in the area than
confrontational standpoints.
More recently, there has been an indication of a shift back to cautiousness
favoured by the decisions of the Second Circuit. A court has acknowledged
that jurisdiction should be refused over a transaction designed in such a
way as to have minimal contacts with the United States.
115
Likewise, there
has been preference shown to the views of the Second Circuit in Zoelsch
v Arthur Andersen.
116
Here, fraud committed in Germany was involved and
jurisdiction of American courts was sought to be established on the basis
of preparatory acts within the United States. The court refused jurisdiction.
Bork J, noting that there were views more permissive, allowing subject
matter jurisdiction where some activity designed to further a fraudulent
scheme occur here, preferred to follow the more restrictive view of the
Second Circuit. He observed:
... jurisdiction is appropriate when the fraudulent statements or
misrepresentations originate in the US, are made with scienter and
in connection with the purchase or sale of securities, and directly cause
harm to those who claim to be defrauded, even if reliance and damages
occur elsewhere.
117
113
Grunenthal GmbH v Hotz (1981) 511 F Supp 582 (CD Cal); Consolidated Oil Fields v
Monoco (1989) 871 F 2d 252 (2d Cir).
114
J Fedder, Waiver by Conduct: A Possible Response to the Internationalization of Securities
Markets (1986) 6 J Comp Bus & Cap Mkt L 1; Symposium on Policing Transborder Fraud
in the United States Securities Markets (1985) 11 Brooklyn JIL 475-559.
115
The Plessey Co v The General Electric Company [1986] NACL 93.
116
(1987) 824 F 2d 27 (DC Cir).
117
In MCG Inc v Great Western Energy Corporation (1990) 896 F 2d 170 (5th Cir) jurisdiction
over a purely foreign fraud was refused though the court found that the defendant had made
extensive machinations to avoid contact with American law. The judge explained the
different views in the American courts in the following terms:
...our colleagues in the Second Circuit have exercised jurisdiction in cases in which
foreign investors alleged fraudulent acts in the United States but declined jurisdiction
when the acts occurring in the United States were merely preparatory to the alleged fraud.
This approach has been viewed as requiring that domestic conduct needed to trigger
subject matter jurisdiction must satisfy the elements of a violation of Rule 10b-5. The
1. Commodities Frauds
Trading in commodity futures being a later phenomenon, legislation
concerning it came later. But, the provisions on fraud in the Commodity
Exchange Act
118
have been interpreted in light of the experience relating
to the securities field. The assumption that the legislative purpose behind
the legislation in the two areas are the same has been made in several cases.
119
Most of the cases on the Act were decided after the period in which the
cautiousness in the interpretation of the securities legislation had ended and
more expansive claims to jurisdiction were coming to be formulated. The
first case to deal with jurisdiction under the Act was Tamari v Bache and
Co (Lebanon).
120
Here, though both parties were non-residents and all conduct
by them had taken place outside the United States, the court upheld ju-
risdiction on the basis that the transaction was effected through an American
exchange. The trend set in this case was followed in other cases involving
frauds on the commodities markets.
121
Thus, in Psimenos v Hutton,
122
the
alleged fraud consisted of misrepresentations made by the defendants agent
in Athens and the court was convinced that the core of the alleged fraud
was committed in foreign lands. But, it nevertheless assumed jurisdiction
over the case. In justifying its decision the court observed:
Although most of the fraudulent misrepresentations alleged in the
complaint occurred outside the United States, the trading contracts
which consummated the transactions were often executed in New York.
The issue on appeal is whether that trading in the United States commodities
markets is sufficient to confer subject matter jurisdiction on a federal
district court to hear a claim for damages brought by an alien under
the Commodity Exchange Act. We find that the district court has
Third, Eighth and Ninth Circuits have adopted a more relaxed standard, requiring that
conduct, not necessarily fraudulent itself, be alleged to have occurred in the United States
in furtherance of the fraudulent scheme.
118
Ss 6 (b) and (c) of the Commodity Exchange Act (1982) deal with fraud.
119
Tamari v Bache (1982) 547 F Supp 309 at 311. For a survey of the law, see RB Earls,
Extraterritorial Application of the Frauds Provisions of the Commodity Exchange Act
41 Wash & Lee LR 1215; M Sager, The Extraterritorial Application of the Antifraud
Provisions of the Commodity Exchange Act (1985) 11 Brooklyn JIL 615.
120
Supra, at note 75.
121
Mormels v Girofinances (1982) 544 F Supp 815 (SDNY); Cresswell v Prudential-Bache
Securities Inc (1984) 580 F Supp (SDNY); but see Alpa SA Agroindustrial Aleman v Acli
Internatinal Inc (1983) 573 F Supp 1070.
122
(1983) 722 F 2d 1041 (2d Cir).
jurisdiction to hear the plaintiffs claim. The trades Hutton executed
on the American markets constituted the final act in Huttons alleged
fraud on Psimenos, without which Huttons employees could not have
generated commissions for themselves.
Put in this manner it may be possible to justify the view that jurisdiction
was properly had on the basis that there was necessarily some act to be
done in the United States for the fraud to be complete and the analogy
with an English decision like Stonehouse
123
could become strong. Though
both in the field of securities and commodities frauds, American courts
have asserted wide grounds of jurisdiction, there is evidence of a conscious-
ness of the limits to jurisdiction and the need to identify a territorial nexus.
But, often policy reasons seem to predominate and the nexus is found on
the existence of minimal conduct.
VI. TOWARDS A NEW THEORY OF
EXTRATERRITORIAL CRIMINAL JURISDICTION
The need for extraterritorial extension of jurisdiction over crimes is coming
to be accepted by the courts. Such a measure of acceptance of extrater-
ritoriality can be seen in newer areas of criminal law where regulation of
conduct harmful to common interests is visible. Thus a report at a conference
of European Ministers of Justice, referring to the need to control environ-
mental pollution, concluded that steps should be taken to ensure that
environmental pollution perpetrated in another member State or across
borders can be punished not only in the place where the act was done,
but also where the result is felt.
124
As the effects of acts begin to be felt
increasingly outside the borders of states, the need to reach out of the
territorial jurisdiction to control these acts will also grow. Policy reasons
will be articulated in justifying extensions of jurisdiction. A recent example
is to be found in the opinion of the Privy Council in Liangsiriprasert v
United States Government,
125
where Lord Griffiths, speaking for the Privy
Council, observed:
Unfortunately in this century crime has ceased to be largely local
123
[1975] AC 55.
124
Protection of the Environment through the Criminal Law (Rapporteur: Hans A Engelhard,
Minister of Justice of the Federal Republic of Germany, 17th Conference of European
Ministers of Justice, Istanbul, 5-7 June, 1990). Council of Europe, Summary of Reports
issued by Information Department, 16 May 1990.
125
[1990] 2 All ER at 878.
in origin and effect. Crime is now established on an international scale
and the common law must face this new reality. Their Lordships can
find nothing in precedent, comity, or good sense that should inhibit
the common law from regarding as justiciable in England inchoate
crimes committed abroad which are intended to result in the commission
of criminal offences in England.
The dicta indicates that there exists within the Commonwealth, a judicial
awareness of the policy grounds justifying the extension of jurisdiction.
126
But, there is a need to control and limit the exercise of such jurisdiction.
Where states do not share a mutual interest in the control of conduct, friction
is bound to result. Existing authority in international law provides only
ambivalent guidance. The Lotus Case,
127
which contains wide and permissive
criteria of jurisdiction, also contains seeds of rules limiting such jurisdiction
on the basis of which it is yet possible to build a useful theory of extra-
territoriality. While laying down a permissive doctrine, the Court did say
that jurisdiction must be exercised by a State without objections or complaints
on the part of other States. This provides broad support for the existence
of an international rule that exercise of a States jurisdiction should not
affect the interests of other States.
Given this limitation, which can be supported by other doctrines such
as the equality of States, non-interference in domestic affairs and the general
fact that States are organised in a horizontal international order, it must
be taken as accepted that States must confine their jurisdiction to their territory
except in situations where it is clear that other States will not object to
their exercise of extraterritorial jurisdiction.
Such objections will generally not be forthcoming in many areas of the
criminal law in modern times. The one obvious area is the control of drug
related crimes. Here, the nature of the cooperation that is evident in the
international sphere indicates a shared interest in the control of the problem
that the exercise of extraterritorial jurisdiction by one State will hardly cause
any protest by other States.
128
The rigidity of the categorization of the
principles of jurisdiction has resulted in the reluctance to recognise that
a category of jurisdiction which stands as an intermediate category between
universal jurisdiction and territoriality jurisdiction is developing and that
this category permits the exercise of extraterritorial jurisdiction, particularly
126
Compare also the dictum of Roberts CJ of the Hong Kong Supreme Court at note 21.
127
PCIJ Series A, N 10.
128
This shared interest is evidenced by international conventions such as the UN Convention
against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.
over criminal conduct. The identification of such a category will prevent
the haphazard attempts to promote certain crimes as attracting universal
jurisdiction on the basis of meagre authority. The identification of this
category is made possible on the basis of four factors. First is the existence
of international conventions which create a duty to try offenders who are
present within territory, though their crimes were committed abroad. The
second is the increasing articulation of a common international morality
which supports the conviction of offenders by domestic courts though their
crimes may have been committed outside the territorial jurisdiction of the
courts. The third factor is that the effects of the crime should have been
felt within the territorial jurisdiction of the court trying the crime. This
factor links the category to the principle of territoriality whereas the first
two factors link it to the principle of universality jurisdiction. The fourth
factor is one of policy. The nature of the crime may be such that its suppression
calls for joint effort by the states affected by it. In these circumstances,
extraterritorial jurisdiction may provide the best method of dealing with
the situation in order to control the types of conduct in question.
The intermediate category thereby acquires a theoretical basis as well
as criteria for identification. The existence of the intermediate category can
do no violence to the existing structure of international law. Assuming that
the structure is horizontal, it is still possible to reconcile extraterritoriality
in respect of certain crimes on the basis that the expression of community
interest in their suppression has removed them from domestic jurisdiction
of states. It has always been recognised as consistent with a system of
sovereign states that certain matters may be removed from the jurisdiction
of the state and subjected to the jurisdiction of other states or to international
tribunals.

The Nationality Decrees in Tunis and Morocco which was decided
in the heyday of state sovereignty, provides sufficient authority for such
a course. The fact is that in the modern world, the exigencies of circumstances
are such that there is a greater need for the removal of many matters from
territorial jurisdiction.
129
It is not always that the removal is to the international
sphere vesting jurisdiction in some international tribunal. It is possible to
envisage a situation in which the removal of territorial jurisdiction justifies
the creation of jurisdiction in another domestic tribunal which is more
fortuitously place to the try the offender or is more willing to try the offender
129
The classic instance is the provision by treaty for jurisdiction over visiting forces. Other
instances would be the submission of foreign investment disputes which are considered
by some states at least as domestic disputes to the jurisdiction of overseas tribunals by treaty
or agreement. The principal treaty in this regard is the Convention on the Settlement of
Investment Disputes (the ICSID Convention).
because its interests have been affected by the commission of the crime
and has an interest in the future deterrence of similar crimes. In these
circumstances, the community interest in the suppression of the crime will
justify the exercise of extraterritorial jurisdiction. Community interest will
be formed quickly around matters of concern to the major states and will
be reinforced by pressures on other states to conform or remain in isolation.
130
To the extent necessary, the assumption of extraterritorial jurisdiction
is justified by other doctrines of international law. The main objection to
extraterritorial jurisdiction is that though prescriptive jurisdiction is per-
missible, enforcement jurisdiction infringes the rights of the territorial state
within whose jurisdiction the offence was committed and which should have
the right of enforcement. This proposition does not hold good for several
reasons in the intermediate category. The territorial state is not subject to
sovereign infringement as it had permitted conduct agreed by international
community to be harmful to the general community to take place within
its territory. The taking of enforcement action in these circumstances cannot
be regarded as an infringement of sovereignty, particularly in circumstances
where the territorial state shows no interest in the prosecution of the offender.
In circumstances where the territorial state refuses to prosecute the offender,
the extraterritorial prosecution could be justified on the basis of defence
of national interests, a notion that is drawn from the general right of self-
defence and as a countermeasure on the basis that there is an obligation
owed to the international community as well as the affected state both to
prevent as well as to prosecute the criminal conduct which the territorial
state has not satisfied.
131
The crimes which could fall within this intermediate category could now
be identified. The list provided is not exhaustive. Many of the crimes may
become so universally abhorred that they may graduate into the category
of universal jurisdiction at some future time. But, until there is cogent
evidence, it is best to leave these crimes in the intermediate category justifying
the use of extraterritorial jurisdiction. Excluded from this category are crimes
is political terrorism which has support in the international conventions for
the exercise of extraterritorial jurisdiction but the exercise of jurisdiction
in cases of political terrorism could as well be supported by other heads
130
It is no doubt better that community interests should develop in a voluntary fashion. But,
there are states which may profit through trafficking in drugs or through maintaining bank
secrecy laws. These states will probably feel the pressure to conform to the general
community interest. The departures made in the strict adherence to bank secrecy laws are
an indication of such pressures.
131
On countermeasures, generally see Zoller.
of jurisdiction such as the passive personality principle. Torture is also
excluded from this category. It is a crime whose candidature for universal
jurisdiction is achieving strength on the basis of advances made in human
rights law.
132
Policy reasons justify its quick gradation into such a status.
133
For this reason, it is not wise that any doctrine be created or academic
support be given for holding back the maturing of torture into an international
crime.
1. Drug Trafficking
Drug trafficking has the strongest element of support for inclusion in
this intermediate category. The existence of numerous international con-
ventions demonstrates an international concern and a commonality of interests
in the suppression of the offence. There is a strong expression of international
solidarity for the suppression of drug-trafficking evidenced by these con-
ventions. The mere existence of these conventions by themselves will not
suffice. The language of the conventions must be examined to ensure that
they support the exercise of extraterritorial sovereignty even though this
may be obnoxious to the state in which the crime itself was committed.
Such obnoxiusness must be shown to be outweighed by the general com-
munity interest in the suppression of the crime as well as the target states
interest in the prevention of the crime.
The consistency of the efforts to deal with the drug problem on a global
scale indicated by the international instruments on the subject, the efforts
132
See s 134 of the Criminal Justice Act 1988 (UK) which makes torture an offence, whatever
the nationality of the offender and wherever the offence is committed. The American courts
have used universal jurisdiction to indict persons who committed torture in foreign states.
The human rights bases on which such jurisdiction is justified has increased in strength.
There is a case pending in the United Kingdom against the use of torture by the Kuwaiti
government. Times 31 May, 1994. Bolder approaches have been taken by the American
courts on the question. These courts have exercised civil jurisdiction over torture regardless
of where it occurred. Filartiga v Pena-Irala (1980) 630 F 2d 876 (2d Cir); Rodriguez-
Fernandez v Wilkinson (1980) 505 F Supp 787 (D Kan); further see T Meron, Human Rights
and Humanitarian Norms as Customary Law (1989) pp 122-130.
133
The consistency of concern of the international community with torture is seen by the number
of international documents which prohibit torture. See, eg, Art 5 of the Declaration of Human
Rights (1948); Art 7 of the International Covenant on Civil and Political Rights (1966);
the common Art 3 of the Geneva Conventions on War (1949); Art 25 of the American
Declaration on the Rights and Duties of Man; Art 5 of the African Charter on Human and
Peoples Rights; Art 3 of the European Convention on Human Rights; the Convention against
Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (1984); LS Sunga,
Individual Responsibility in International Law for Serious Human Rights Violations (1992),
85.
made by international organisations and the attitudes of national courts to
the problem coincide in giving support to the view that exercise of ex-
traterritorial jurisdiction in this area will not be considered offensive particularly
in situations where the state exercising jurisdiction is the target state of
the crime.
2. Pollution
There is a general interest in the suppression of environmental pollution.
Regulation through the use of the criminal law has become common-place
in most states. The extent of concern with environmental pollution and the
urgency of the need to address it on the basis of global plans is evidenced
by the growth of international conventions both on the general problem
of environmental protection as well as specific sectors which cause more
immediate concern. In this context, there will be general community support
for the use of criminal laws extraterritorially in order to deal with common
problems of environmental concern.
But, despite this growth of conventional law and domestic criminal law,
except in the clearest instances of massive pollution originating elsewhere
and causing harm to the state claiming jurisdiction, exercise of jurisdiction
over several aspects of environmental law will prove problematical.
134
There
is no uniform standard of environmental protection which has or can emerge,
given the conflicting attitudes towards environmental protection in the
different parts of the world.
3. Transnational Fraud
There is an accumulation of evidence that extraterritorial jurisdiction over
transnational frauds will receive a great measure of acceptance. In certain
circumstances, like where the fraud is aimed at securing social service
benefits abroad or immigration permits, jurisdiction is justifiable on the
basis of the protective principle. But, in cases where the aim is to commit
frauds on the banking system or the securities industry, the founding of
jurisdiction on the basis of the protective principle is tenuous. Here, clearly
134
See, eg, NEPA Coalition of Japan v Aspin (1993) 837 F Supp 466 where an American court
held that the National Environmental Protection Act did not mandate a environment impact
study in respect of defence installations constructed in Japan. Further see D Brubaker, Marine
Pollution and International Law (1993) pp 384-386. There is no clear sanction for criminal
enforcement against polluters. Conventions providing for port state jurisdiction merely
provide for inspection and report. GC Kasoulides, Port State Control and Jurisdiction (1993).
the effects principle will have to be resorted to and there will be acceptance
of the use of the principle on the basis that the suppression of transnational
fraud is in the interest of the international community. The common morality
which condemns frauds also facilitates the acceptance of such a view.
However, there are likely to be problems in specific areas. There may
not be a similarity of attitudes to certain types of conduct. Insider training
was frowned upon in the United States from the inception of securities
regulation but most European systems, until recently, had an ambivalent
attitude to such conduct. Enforcement may involve securing evidence from
overseas and this is an area which has caused friction due to the existence
of bank secrecy laws.
135
These factors may militate against the suppression
of frauds of a certain type being regarded as in the general community
interest as attitudes to them may vary or some states find that their interest
in maintaining bank secrecy laws and laws on the confidentiality of business
documents outweigh their support for the community interest in the sup-
pression of fraud. Careful weight must be given to these considerations
in determining whether the exercise of extraterritorial jurisdiction in a
specific situation of fraud will be supported by the international community
and account must be taken of the interests of the state opposing extraterritorial
jurisdiction. In such circumstances, the categorisation and identification of
general principles breaks down and each case must be considered on its
own merits, having regard to the reasonableness of the exercise of extra-
territorial jurisdiction. But, the fact that the crime can fall within the intermediate
category is a starting point for analysis. Then, other factors which are relevant
will have to be weighed up.
4. Other Possible Crimes
There are other candidates for inclusion in this category. But, though
there may be conventions and other evidence supporting their claims to
inclusion, it is still unclear as to whether the response of the international
community is in any sense uniform. The use of bribery and corruption in
international business may be such an offence. But, again, where it is
committed abroad and the state affected itself does not take any action,
135
The conflict is exemplified by the litigation involving the Standard Chartered Bank and
the American Securities Exchange Commission. SEC v Wang (1988) 699 F Supp 44 (SDNY).
The banking laws of Hong Kong recognised secrecy of accounts of a defendant alleged
to have committed securities frauds in the United States. The New York court froze bank
accounts of the defendant in Hong Kong and issued antisuit injunctions against him seeking
assistance from courts to operate his accounts. The British Government, (Hong Kong, being
a British colony) filed an amicus curiae brief objecting to the American courts exercising
jurisdiction in this manner.
the issue is whether another state, such as the home state of the offender,
should intercede and take action in the matter. Stealing of cultural property
and kidnapping of children have some consensus as prohibited acts in
international conventions but whether there is support for dealing with them
through extraterritorial criminal enforcement still remains a moot point.
As regards the areas in which community support is only hazily formed,
the States which need to enter these areas, should seek to avoid conflict
through the mechanism of consultation that have been established in memoranda
of understanding. In this manner, the problem of extraterritoriality can
hopefully be resolved. It is possible to construct a scale of protests that
extraterritoriality will evoke in different areas and proceed with caution
and adopt an attitude of consultation in areas where such protests will be
intense. Extraterritorial jurisdiction is the way of the future and the limits
to it must be explored and set out with some precision.
VII. CONCLUSION
The law on criminal jurisdiction is sorely in need of restatement. Despite
the efforts of law reform commissions in this area, it is unlikely that much
progress will be made through legislative measures to change the law. In
future conflicts resulting from extraterritorial claims to jurisdiction, it will
be the executive which will have to represent the national interest and it
will not help its cause if it had initiated legislation approving extension
of jurisdiction.
It has been left to the judges in the common law jurisdictions to deal
with the problem. The techniques that they have so far used to extend
jurisdiction can be reconciled with strict territorial basis of jurisdiction. The
effort to find an agent who had carried out some activity in connection
with the crime within jurisdiction or the idea of classifying the crime as
a result crime and pegging jurisdiction on the fact that some act in connection
with the crime took place within jurisdiction do not involve deviations from
the territoriality principle to any marked degree. The question is whether
this fidelity to the territoriality principle is justified in the face of the
burgeoning problem of transnational crime and transnational fraud. A better
approach may be to confront the issue more directly and accept that
extraterritoriality is permissible where there is a consensus within the
international community on the need for the suppression of certain types
of criminal behaviour. Where such consensus exists, a court which is able
to exercise jurisdiction over the offender should boldly do so. In the area
of drug trafficking there is such clear evidence of a consensus. In the area
of transnational fraud, such consensus is less clear but the exercise of
jurisdiction will be condoned by other states unless issues such as bank
secrecy are implicated in the investigation and prosecution of the fraud.
In the hierarchy of prohibited conduct over which extraterritorial jurisdiction
could be had, as much as drug trafficking and fraud may come high, antitrust
violations and prohibitions of export controls will be low because extra-
territorial jurisdiction in respect of such violations is not supported by any
appreciable community backing. The creation of some such hierarchy and
the fashioning of a new theory of extraterritoriality is necessary to solve
the issue of transnational fraud. The maintenance of hostility to extrater-
ritoriality on the basis of a monolithic theory of jurisdiction that all ex-
traterritorial jurisdiction is bad is to maintain a charter of freedom for
international criminals.
M SORNARAJAH*
* LLM (Yale); PhD; LLD (London); Professor of Law, National University of Singapore.
The author wishes to thank Professor James Crawford, Whewell Professor of International
Law, University of Cambrigde and Dr G Marston, Fellow of Sidney Sussex College,
Cambridge, for reading and commenting on an earlier draft of this article.

Sjicl 1998 1

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sjicl 1998 1

Uploaded by

Copyright:

Available Formats

1 Extraterritorial Criminal Jurisdiction 2 SJICL

Singapore Journal of International & Comparative Law

You might also like