At the same time, the foreign minister’s comments point to the rising use of extraterritoriality by the United States to assert its interests in global affairs. In a diverse set of issues – anti-corruption, anti-trust, bank secrecy, counterterrorism and conflict minerals, to name a few — U.S. law extends far beyond its territory. In some instances, no U.S. firm or citizen is even involved. Instead, extraterritoriality is justified through the ‘effect’ that foreign actions might have on the United States. A merger between Nokia and Alcatel, for example, might limit competition in the U.S. telecommunications market.
More troubling for the Russian foreign minister, however, is a shift to a legal justification based on ‘presence,’ in which U.S. authorities can prosecute based on the fact that someone has a mere presence or tie to U.S. markets. In both cases, U.S. officials use the pull of stock markets and financial institutions to extend the reach of domestic law globally.
And the United States is far from the only one doing this. As my co-author David Bach and I have demonstrated, Europe is hot on our tail, leveraging its market to extend the reach of its rules. Just ask Google or Facebook about European privacy laws.
This raises two questions. First, when are states likely to use these extraterritorial powers? Here we do not know very much. Tonya Putnam shows in a study in International Organization that U.S. courts are most likely to use extraterritoriality when they see foreign activities as threatening fundamental values. That said, U.S. courts have repeatedly redefined the application and scope of extraterritoriality. Moreover, regulators and the Justice Department may have very different motivations stemming from bureaucratic or political interests.
Second, what are its limits? Extraterritoriality avoids the cumbersome realities of multilateral negotiations. But for many, including the Russian foreign minister, it smacks of U.S. hegemony. Used in excess, it could undermine the legitimacy to act globally. Given the size and importance of the U.S. and European economies, however, it might just be the privilege that such states enjoy.
Increasingly, domestic law is being used on an international scale to shape the contours of globalization. The reaction to the FIFA case shows how other countries are nervous about its reach and what it may signal outside the soccer pitch.
Abraham Newman is associate professor at Georgetown University’s Edmund A. Walsh School of Foreign Service and the Government Department.