Regulatory Imperialism?

22 January 2023
17:42
Regulatory imperialism refers to the idea that larger, more powerful countries or organizations impose
their own regulatory standards on smaller or weaker countries or organizations.
 
 
Extraterritorial jurisdiction (ETJ) is the legal ability of a government to exercise authority beyond its
normal boundaries.
 
 
Any authority can claim ETJ over any external territory they wish. However, for the claim to be effective
in the external territory (except by the exercise of force), it must be agreed either with the legal authority
in the external territory, or with a legal authority that covers both territories. When unqualified, ETJ
usually refers to such an agreed jurisdiction, or it will be called something like "claimed ETJ"
 
Primary sanctions are economic restrictions. These restrictions require compliance from all persons and
entities within the issuing country. In the United States, the Office of Foreign Assets (OFAC) imposes a
range of sanctions, including full trade embargoes, asset freezes or seizures and travel bans against
foreign targets.
 
Secondary sanctions are designed to prevent third parties from trading with countries subject to
sanctions issued by another country - even if these third parties are not citizens of the issuing country or
based in the issuing country. They may face penalties for doing business with the targeted country or
individuals. 

The primary difference between primary and secondary sanctions is that secondary sanctions are
enforced by targeting domestic entities rather than the third party. In another example, when the US
reinstated their sanctions against Iran, they reinstated secondary sanctions for non-US persons trading
with Iran for sectors, including the energy, precious metal, software, food or financial services industries. 

 
By using an a contrario reasoning, the sentence "When a statute gives no clear indication of
an extraterritorial application, it has none" can be reformulated as "When a statute gives a
clear indication of an extraterritorial application, it has one".
The implications of this result are that if a statute explicitly states that it applies to actions or
conduct that occur outside of the jurisdiction of the enacting country or organization, then it
does have extraterritorial application. This means that individuals or entities that are subject
to the jurisdiction of the enacting country or organization can be held liable for actions or
conduct that occur outside of that jurisdiction, as long as it relates to the specific statute.
 
 
 
U.S. securities laws apply only to the purchase and sale of securities listed on a regulated
market in the United States, or to the purchase and sale of “other securities” in the United
States.
 
 
In the BNP Paribas law suite, U.S. authorities argued that American jurisdiction was justified
in the case because the bank had conducted transactions through U.S. financial institutions,
which are subject to U.S. laws and regulations. Additionally, the violations in question, which
involved violating U.S. sanctions against countries such as Sudan, Iran and Cuba, had a direct
impact on the U.S. financial system and national security.
BNP Paribas handled the proceedings by entering into a settlement agreement with U.S.
authorities, in which the bank agreed to pay a fine of $8.9 billion and to implement a
comprehensive compliance program. The bank also admitted to violating U.S. sanctions and
agreed to a five-year probation period during which it will be subject to ongoing monitoring
by the U.S. government.
Additionally, BNP Paribas cooperated with the authorities throughout the proceedings, and
as part of the agreement, voluntarily disclosed conduct that had not previously been
discovered. This cooperation was considered as a mitigating factor in determining the final
settlement
 
 
The "EU Blocking Statute" is a regulation adopted by the European Union to protect EU
companies and citizens from the extraterritorial effects of certain laws adopted by third
countries, particularly the United States. It was enacted in 1996, originally in response to the
extraterritorial application of the U.S. sanctions against Cuba, Iran, and Libya.
The EU Blocking Statute prohibits EU companies and citizens from complying with certain
foreign laws and regulations that would otherwise be binding on them, if such compliance
would damage the interests of the EU or its member states. It also allows for the recovery of
damages caused by the extraterritorial application of such laws.
Generally speaking, the EU Blocking Statute is seen as a powerful tool for the EU to assert its
autonomy and protect its companies and citizens from the extraterritorial effects of foreign
laws. However, it is also seen as a measure that can create legal uncertainty and conflicts
with third countries.
The consequences of the CJEU decision in Bank Melli v. Deutsche Telekom in this context is
that the EU Blocking Statute applies to EU companies and citizens even when they are facing
U.S. secondary sanctions, and it is not limited to the primary sanctions. Thus EU companies
will be protected from the secondary sanctions and can do business with the countries
targeted by the sanctions. The decision also confirms that EU companies have the right to
claim damages if they suffer losses as a result of the sanctions
 
 
The Foreign Corrupt Practices Act (FCPA) is a U.S. law that prohibits companies and
individuals from bribing foreign officials in order to obtain or retain business. The FCPA
applies to companies and individuals that are based in the United States, as well as foreign
companies and individuals that engage in certain types of conduct that have a sufficient
connection to the United States.
The legal bases that justify U.S. authorities' jurisdiction over foreign entities and individuals
for conduct that occurred overseas under FCPA are:
 The FCPA's territorial jurisdiction provision, which provides that the FCPA applies to
any person who commits an act in furtherance of a corrupt payment while in the
territory of the United States;
 The FCPA's nationality jurisdiction provision, which provides that the FCPA applies to
any person who is a national of the United States, regardless of where the person is
located or where the act occurred.
The FCPA also has a so-called "extraterritorial jurisdiction" which allows the jurisdiction of
the U.S. authorities to apply on foreign companies and individuals if they use the U.S.
banking system to transfer money related to the bribe, or if they are listed on U.S. stock
exchanges.
Compared to fines imposed on French corporations on sanctions matters such as BNP
Paribas in 2014, or anti-bribery such as Alstom in 2014, fines imposed under the FCPA tend
to be higher. This is because FCPA enforcement has been increasing significantly in the
recent years, with fines and penalties reaching hundreds of millions of dollars for some
cases. Therefore, it can be said that FCPA enforcement marks a step forward in terms of its
ability to impose large fines on companies for corrupt practices.
 
 
The General Data Protection Regulation (GDPR) applies extraterritorially, meaning that it
applies to companies and organizations located outside of the EU if they process personal
data of individuals located in the EU. The GDPR applies to any company or organization that
processes personal data of individuals located in the EU, regardless of whether the company
or organization is based in the EU or not.
The conditions for a website operated by a company located outside the EU to fall under the
scope of the GDPR are as follows:
 The website offers goods or services to individuals located in the EU.
 The website monitors the behavior of individuals located in the EU.
 The website processes personal data of individuals located in the EU.
If a website operated by a company located outside of the EU meets any of these conditions,
it is subject to the GDPR and must comply with its requirements, including obtaining the
appropriate consent for data processing, providing data subject rights, and appoint a Data
Protection Officer if required.