IBA initiatives and activities - Extraterritorial jurisdiction - IBA encourages reform - Diana Bentley

A timely report from the IBA calls for governments to work together to move towards standardised regulation.

Globalisation shrinks the world, notes the introduction to the report of the IBA Legal Practice Division Task Force on Extraterritorial Jurisdiction. It encourages national governments and courts more frequently to try to apply their laws beyond their boundaries. They seek to control a whole range of matters going on outside their territory from criminal activity to transport and communication, antitrust and tax. Plenty of nice legal questions accordingly swirl around the subject of extraterritorial jurisdiction and they increasingly occupy the minds of lawyers and their clients.

The release of the report at the IBA’s Annual Conference in Buenos Aires last October could hardly have been more timely. The worldwide economic downturn, which was then unfolding, has already prompted calls for greater harmonisation of laws and regulations between countries, particularly in the financial and securities field. But in 2006, when David W Rivkin, then Chair of the IBA’s Legal Practice Division (LPD), formed the Task Force on Extraterritorial Jurisdiction, he already foresaw that someone needed to take stock of the law and practices prevailing in the area and to make suggestions for the resolution of some thorny issues in the field. Greater governmental cooperation in framing, implementing and enforcing regulation was needed to avoid overlapping and conflicts and a full study could not only help practitioners but legislators and regulators too.

‘At the Annual Conference in Prague in 2005 we had discussed the problems of extraterritoriality from various standpoints’, recalls Rivkin, a New York-based partner of Debevoise & Plimpton, whose focus is international dispute resolution.

‘It vexes many governments and companies in a wide range of industries. Almost any multinational faces conflicting government regulation. The IBA had already been active in bringing together regulators and practitioners in the antitrust field to avoid the overlap of laws. In 1993, the Capital Markets Forum had compiled a report on extraterritoriality in the securities industry. But it became clear to me that this was an area in which the IBA, with its vast depth of legal expertise and geographical spread, could help to develop solutions and recommendations generally.’

Rivkin appointed two seasoned IBA officers to co-chair the task force: Michael Greene of A&L Goodbody, Dublin, former Chair of the IBA’s Business Organisations Committee and now the IBA’s Treasurer, and Claus von Wobeser, of Von Wobeser y Sierra, Mexico City, former Chair of the IBA’s Arbitration Committee and former President of the Mexican Bar Association.

‘One fortuitous outcome of the current economic crisis is that it presents a greater impetus to governments to move towards more standardised regulation’’

Formidable task

‘David’s idea was to have a complete review of the main issues lawyers encounter when their clients are doing business across borders and when the laws of one country may reach into another country’, says Greene. But all of them realised too that the task force needed to focus on areas that were particularly problematic. ‘We have about 50 committees in the LPD so we had to be selective’, says Greene. ‘We chose six areas – antitrust, tort, criminal, bribery and corruption, securities and insolvency – where overlap causes substantial friction and where our recommendations could be most helpful.’ An impressive list of experts in each area – practitioners, regulators judges and members of non-governmental organisations – formed specialist committees. ‘We wanted the six committees to make recommendations that we could consider and take on board, then use to bring about change’, says Greene.

To begin with, however, the report’s introduction presents a valuable and scholarly insight into both the theoretical and practical landscape of extraterritorial jurisdiction: from the types of jurisdiction that can be exercised by a state to the bases and sources of jurisdiction and the various approaches that can be taken when jurisdictions overlap.

‘There are two main challenges in the field of extraterritorial jurisdiction’, reports Rivkin. ‘What is the proper role of courts – how much relationship is there between the dispute and the jurisdiction where they are being asked to intervene, and how much deference should be given to courts in other countries that may have a more substantial contact with the case?’ A general question, he says, is what happens when each country involved in a case has valid reasons to regulate someone within their borders. ‘How does a multinational deal with that?’ he asks.

But looking for, and finding, common issues overall is not easy. ‘There are obviously a substantially different array of themes between the six areas covered especially if you look at the two areas of litigation – torts and criminal law’, says Greene. Nonetheless, the six reports present comprehensive summations of the law and issues in each area. ‘There are no books in which you can find all of this material – it’s a useful guide for all practitioners and governments’, says Claus von Wobeser. He points out too that what is contained in the report is a fraction of what was originally produced. ‘What was published has been condensed but the complete report may be put on the IBA website in future.’ It was an ambitious project to undertake in two years but it has been one of the most serious studies ever undertaken on the topic, he confirms.

Future

In addition to the usefulness of the report to practitioners grappling with extraterritorial issues, the task now is to make it more widely known. ‘Many people may not know just how important and practical a document has been produced’, says von Wobeser. The challenge also is to see that the report is used to spearhead change and while Rivkin, Greene and von Wobeser are all proud of the report, they are keen to see that it can move onto the next stage of its life. ‘It would be wonderful to see some change happen in the next few years’, says Greene.

Now that the task force’s job is complete, the 15 LPD committees that contributed to the six task force committees have been charged with keeping change on the agenda. ‘Our strategy is to disseminate the report to legislators and regulators and others who can help consider it to achieve law reform’, says Greene. It was fortunate that some task force specialist committees contained government regulators who will help distribute the report but the relevant LPD committee chairs will be making complete ‘hit lists’ of those who should receive the report.

Rivkin is pleased that one fortuitous outcome of the current worldwide economic crisis is that it presents a greater impetus to governments to move towards more standardised regulation. ‘This is probably the most severe economic crisis since the Great Depression so it’s very important that governments work together in this area. There are other organisations looking at extraterritoriality, including the International Chamber of Commerce (ICC) in Paris, but not with this level of detail and with the same thought of moving ahead. So the report can play a very meaningful role now.’ Michael Greene too is optimistic that the IBA may be able to strike while the iron is hot. ‘This is exactly the time when legislators and regulators are considering change and tightening regulation’, he says.

‘There are no books in which you can find all of this material’

Claus von Wobeser
Von Wobeser y Sierra

Greene and von Wobeser, who had the difficult job of extracting time from busy people, point out that the work was intense but satisfying, and that many people made it possible, including committee members and rapporteurs – Anthea Roberts, formerly of Debevoise & Plimpton and now a professor at the London School of Economics, and later Louise Byrne of Debevoise & Plimpton, who helped coordinate the project as overall rapporteurs. ‘The report will be a great legacy of David’s term of office’, says von Wobeser. It shows clearly too the way in which the IBA is a pioneer and a catalyst for change.

The Report of the IBA Legal Practice Division Task Force on Extraterritorial Jurisdiction is available to download as a free pdf at http://tinyurl.com/taskforce-etj-pdf

There are also a limited number of printed copies of the Report at a price of £25, available from the IBA shop at http://tinyurl.com/taskforce-etj-book

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Diana Bentley is a former practicing lawyer and is now a journalist, writer and public relations adviser based in London. She can be contacted by e-mail at dianab@dircon.co.uk