Introduction: The problem of prescriptive jurisdiction

The problem of delimitation, or allocation, of prescriptive jurisdiction, sometimes misleadingly known as the problem of extraterritoriality, has long mystified and attracted international economic law scholars and commentators, and frustrated diplomats and regulators. Under what circumstances should U.S. antitrust law, securities law, labor law, or environmental law, for example, apply to conduct, effects, or institutions that are wholly or partially locatable abroad? The problem results from the fact that each state, or jurisdiction, may have multiple relations with a particular activity, asset, or person. Thus, granted bases for jurisdiction that include nationality, territorial residence, territorial conduct, territorial effect, and perhaps other bases, it is possible for more than a single state or jurisdiction to seek to regulate a single activity, asset or person. This regulation may result in overlaps that increase costs of compliance or that contradict one another. It may also result in “underlaps” that make possible regulatory arbitrage, avoidance or evasion.

The rise of the regulatory state, and the rise of international trade and investment, have combined to make these issues arise more frequently, and with greater consequences, than in the past. In fact, the problem of prescriptive jurisdiction has more recently been linked explicitly to issues of trade and competitiveness, for example, where the United States threatens to apply its antitrust laws to activities in Japan or elsewhere that foreclose markets to U.S. firms.