Jurisdictional Standards (and Rules)
Muchmore, Adam I., Vanderbilt Journal of Transnational Law
This Article uses the jurisprudential dichotomy between two opposing types of legal requirements--"rules" and "standards"--to examine extraterritorial regulation by the United States. It argues that there is natural push toward standards in extraterritorial regulation because numerous institutional actors either see standards as the best option in extraterritorial regulation or accept standards as a second-best option when their first choice (a rule favorable to their interests or their worldview) is not feasible.
The Article explores several reasons for this push toward standards, including: statutory text, statutory interpretation theories, the nonbinary nature of the domestic/foreign characterization, the tendency of extraterritorial regulation to favor plaintiffs, interest-group pressures, and interbranch struggles within the federal government.
Since it appears standards are here to stay, this Article concludes by suggesting that they may have some underappreciated benefits, at least from the perspective of a regulating state. First, the uncertainty inherent in standards may be a necessary consequence of regulatory schemes permitting private civil litigants to enforce extraterritorial statutes. Second, this inherent uncertainty may permit a state's regulatory program to influence primary behavior abroad that would be difficult to reach through a rule-based model.
TABLE OF CONTENTS I. INTRODUCTION II. "RULES" AND "STANDARDS" A. Overview 1. Rules 2. Standards B. Existing Literature C. Rules, Standards, and the Conflict of Laws III. THREE CATEGORIES OF TERRITORIAL SCOPE A. Extraterritorial Rules B. Territorially Limited Rules C. Potentially Extraterritorial Standards IV. THREE TYPES OF INTERPRETIVE METHODS A. Proextraterritoriality 1. Analysis of Interests 2. Last-in-Time Rule 3. Traditional Categories of International Jurisdiction B. Antiextraterritoriality 1. Territorial Theories of State Power 2. Presumption Against Extraterritoriality 3. Presumption that Congress Does Not Intend to Violate International Law 4. Comity C. Territorially Neutral 1. Archaeological Theories 2. Dynamic Theories 3. Preference-Eliciting Default Rules 4. Other Canons of Construction V. PRECEDENT, THROUGH RULES AND STANDARDS A. Rules, Standards, and Extraterritoriality Precedents B. The Extraterritoriality Spectrum C. Plaintiffs, Defendants, and Extraterritorial Regulation VI. STRUCTURING LEGAL REQUIREMENTS: RULES, STANDARDS, AND LEGISLATIVE DELEGATION A. Instrumental Perspectives and Nonrepeat Players B. Repeat Players, Regulators, and Principal--Agent Problems C. Optional Delegation of Legislative Authority D. Mandatory Delegation of Enforcement Authority E. Interest Groups and the Rule-Standard Decision 1. Business Groups 2. Lawyers F. Rules, Standards, and International Economic Policy VII. STABILITY AND UNCERTAINTY A. Stability: Interpretive Methods B. Uncertainty as a Regulatory Tool 1. Self-Adjusting Enforcement Levels 2. Discouraging Egregious Violations VIII. CONCLUSION
Extraterritorial regulation, once an esoteric topic, is now a basic fact of the international business environment. A company may be incorporated in one country, listed on a stock exchange in a second country, have offices in numerous other countries, and sell products throughout much of the world. Each country with which the company has a connection will likely seek to regulate some of the company's activities within that country. However, many countries find that they cannot reach in-country activities (such as sale of dangerous products or monopoly pricing) without regulating out-of-country activities (such as manufacturing processes or agreements to collude) as well. …