This Article addresses an underexplored but critical aspect of the presumption against extraterritoriality. The presumption against extraterritoriality—which the United States Supreme Court has increasingly invoked in recent years—calls for courts to presume that Congress does not intend U.S. statutes to govern events outside the United States. The most difficult issue presented by the presumption arises when relevant events occur both inside and outside the United States, as in the classic example, if a shooter on one side of the border kills a victim on the other, or if, as in the leading case, false statements originating inside the United States impact the price paid in purchasing stock outside the United States. How should a court decide whether such cases involve extraterritoriality and trigger the presumption? In a world in which both the performance and impact of regulated activities increasingly occur within more than one nation, the need for courts to resolve this sort of question is likely to arise with increasing frequency.
In Morrison v. National Australia Bank Ltd., the United States Supreme Court established the Court’s test for resolving this question: determining extraterritoriality based upon the location of the event that constitutes the “focus” of the statute at issue. Yet, if the focus of the statute determines extraterritoriality, what is the test for determining the focus of the statute? The Court’s answer was to evaluate the language and purpose of the statute in order to see whether Congress intended it to reach the events in question when they take place outside the United States. The result is entirely circular because it required the Court to determine whether Congress intended the statute to reach the situation in order to invoke the presumption to determine whether Congress intended the statute to reach the situation.
This Article argues that a better approach determines extraterritoriality in light of the purposes for the presumption against extraterritoriality: specifically whether applying the statute to the situation before the court will trigger international relations concerns. I explore the parameters and implications of this approach. This includes considering approaches to determine when applying U.S. law to situations involving events both inside and outside the United States triggers international relations concerns, and noting some of the unusual implications of this approach—for example, that international relations concerns may sometimes call for a presumption in favor of applying U.S. law to a situation involving events both inside and outside the United States.