EXTRA-TERRITORIAL APPLICATION OF UNITED STATES LAW

2. EXTRA-TERRITORIAL APPLICATION OF UNITED STATES LAW Paul B. KlaasPartner-in-charge (International) Dorsey & Whitney LLPMinneapolis / London

3. Microsoft v. ATT (U.S. Sup. Ct. 2007) • “There is a presumption that United States law governs domestically but does not rule the world.”

5. SOME US LAWS WITHEXTRA-TERRITORIAL APPLICATION • Antitrust Laws • Securities Fraud Laws • Foreign Corrupt Practices Act • Export Administration Regulations • Cuban Asset Control Regulations

6. US ANTITRUST LAWS

7. Sherman Act (1890)

8. Sherman Act • Section 1: Restraint of Trade • Section 2: Monopolization

9. Clayton Act (1914)

10. Clayton Act • Price discrimination • Tying • M&A

11. “Effects Test” • US courts have jurisdiction over the conduct of foreign corporations where that conduct was intended to, and actually did, affect US commerce • US v. Alcoa (2d Cir. 1945)

12. Foreign Trade Antitrust Improvements Act (“FTAIA”) (1982)

13. FTAIA • US antitrust laws apply if: • 1) The conduct has a “direct, substantial, and reasonably forseeable effect” on US domestic commerce, imports into the US, or US exporters, and • 2) The conduct “gives rise to a claim under the provisions of the [US antitrust laws]”

14. Statoil v. Heeremac (5th Cir. 2001) • Global conspiracy among barge owners caused American consumers to pay “supracompetitive prices for oil” • But, the global conspiracy did not “give rise to an [antitrust] claim” by Statoil • So, US antitrust laws do not apply • Case dismissed

15. Comity • Timberlane Lumber Co. v. Bank of America(9th Cir. 1976) • US federal courts should balance “effects” on the United States of anticompetitive conduct in foreign countries against “the degree of conflict with foreign law or policy” before finding that US antitrust laws apply

16. US SECURITIES LAWS

17. US SECURITIES LAWS • Securities Act of 1933 • Section 5: requires that corporations register with SEC if wish to sell securities in the US • Securities Act of 1934 • Section 10(b)(5): forbids “untrue statement of a material fact” • Public Company Accounting Reform and Investor Protection Act of 2002 • the “Sarbanes-Oxley Act”

18. Sarbanes-Oxley Act of 2002

19. Sarbanes-Oxley Act • Increased disclosure requirements for public companies • Corporate executives personally responsible for financial information reported to SEC • Increased SEC enforcement powers and penalties

20. Effects and/or Conduct • In determining whether US securities laws apply, US courts will apply: • An “effects test” and • A “conduct test”

21. Foreign³ [foreign-cubed cases] • “1) foreign plaintiffs suing, • 2) a foreign issuer in an American court for violations of American securities laws based on securities transactions in • 3) foreign countries.” • Morrison v. National Australia Bank Ltd.(2d Cir. 2008) (certiorari accepted by US Sup. Ct.)

22. Morrison v. National Australia Bank Ltd. (2d Cir. 2008) • Q. “What conduct comprises the heart of the alleged fraud?” • A. The fraudulent statements made at NAB headquarters in Australia, not the falsified numbers calculated in US • No jurisdiction in US federal court • Case dismissed

23. Foreign Corrupt Practices Act (“FCPA”)

24. FCPA • A “covered person” • may not make a prohibited payment or offer • to a “foreign official” • with corrupt intent.

25. FCPA • “Covered person” includes, for example: • US citizens • US corporations • Foreign subsidiaries of US corporations • Foreign corporations who are “issuers” registered with the SEC • Anyone acting in the US

26. FCPA • “Prohibited payments or offers” include, for example: • Cash • Paid travel expenses • Free upgrades of airplane seats • Requested donations to charities • “Anything of value”

27. FCPA • “Foreign official” includes, for example: • Government officials • Employees of state-owned or controlled entities

28. FCPA • “Corrupt intent” includes, for example: • Influencing any act or decision, or • Securing any improper advantage, or • Inducing the foreign official to use his influence • To obtain or retain business

29. Lanny Breuer Assistant Attorney General of the United States (Criminal Division) November 12, 2009 • “Our focus and resolve in the FCPA area will not decrease, and we will be intensely focused on rooting out foreign bribery in your industry. That will mean investigation and, if warranted, prosecution of corporations to be sure, but also investigation and prosecution of senior executives. Effective deterrence requires no less. Indeed, we firmly believe that for our enforcement efforts to have real deterrent effect, culpable individuals must be prosecuted and go to jail…”

31. EXPORT ADMINISTRATION REGULATIONS • (“EAR”)

32. Export Administration Regulations (“EAR”) • Targets “dual use” items -- items that can have commercial or military uses • Items can be commodities, technology, software…

33. EAR • US Department of Commerce license is required, if: 1) the item is “in the United States” or is “U.S. origin,” 2) the item is on the Commerce Control List (15 C.F.R. pt 774), and 3) the item is being exported or re-exported to a country on the Country Chart (15 C.F.R. 738)

34. EAR • “Re-export” includes: • Transfer of U.S. origin items from one foreign country to another • Transfer of technology or software to a foreign national outside of the US (e.g., delivery, oral briefing, visual inspection)

35. CUBAN ASSETCONTROL REGULATION (“CACR”)

36. Cuban Asset Control Regulation (“CACR”) • CACR bars US citizens or entities • from transacting business with Cuba

37. CACR applies to: • All US citizens • All US permanent residents • All individuals and organizations physically in the US • All branches and subsidiaries of US organizations throughout the world • US Office of Foreign Assets Control

38. NyheterCuba fordømmer norsk hotellnekt Scandic Edderkoppens amerikanske eiere vil ikke ha kubanske gjester. Foto: Espen Braata /Scanpix Kubanske myndigheter beskylder Norge for å bøye seg for amerikansk press etter at en kubansk delegasjon ble nektet å ta inn på et amerikanskeid hotell i Oslo.

39. Helms-Burton Act (the “Libertad” Act) (1996)

40. Helms-Burton Act • Title III: “Protection of Property Rights of US Nationals” • US nationals who had property expropriated by the Cuban government can sue anyone who “traffics” in such property, including non-US individuals and entities (suspended) • Title IV: “Exclusion of Certain Aliens” • “Traffickers” (including corporate executives) can be denied entrance to the US

41. Canadian Response to theUS Helms-Burton ActThe Godfrey-Milliken Bill (Canada, 1996)

42. Godfrey-Milliken Bill • Persons loyal to England who fled the US in 1776 and became Canadians may reclaim land confiscated by American revolutionary courts • Americans who “traffic” in property confiscated from loyalists shall be barred from Canada • (The bill was not passed by the Canadian Parliament)