The problem asks how the reasonableness limit on a state's jurisdiction to prescribe — the authority to make its law applicable to conduct, persons, and effects — should be specified and applied when the foreign state's connection to the challenged conduct is approval, regulation, or a comprehensive market structure rather than a direct command. It arises from Andreas F. Lowenfeld's Hague Academy course International Litigation and the Quest for Reasonableness and his critique of Hartford Fire Insurance Co. v. California (1993), where the U.S. Supreme Court limited comity analysis to cases of 'true conflict' in which a person cannot comply with the laws of two states. The problem has three linked parts: where the conflict-of-state-interests threshold lies in the space between foreign indifference and foreign compulsion; what weight each Restatement-style reasonableness factor deserves, and whether some dominate in particular fields such as antitrust, maritime activity, or trade regulation; and by what criterion one distinguishes a genuinely unreasonable exercise of prescriptive jurisdiction from one that is merely contested but lawful. Later developments — Empagran (2004), Morrison (2010), Motorola Mobility (2014), RJR Nabisco (2016), and the Restatement (Fourth)'s recasting of reasonableness as an interpretive principle (2018) — displaced the original effects-versus-balancing framing and answered the source's predictive sub-question in an unanticipated way, but left the core specification problem open and actively debated.

Background

Jurisdiction to prescribe (also called legislative jurisdiction) is the authority of a state to make its law applicable to persons, conduct, or events; it is distinct from jurisdiction to adjudicate (the authority of courts to hear a case) and jurisdiction to enforce. In the United States, since United States v. Aluminum Co. of America (2d Cir. 1945), it has been accepted that a statute reaches conduct abroad that was intended to produce, and did in fact produce, substantial effects within the United States — the 'effects doctrine'. In Timberlane Lumber Co. v. Bank of America (9th Cir. 1976), Judge Choy held the effects test incomplete in international cases and added a third step: whether the interests of, and links to, the United States are sufficiently strong, vis-à-vis those of other nations, to justify an assertion of extraterritorial authority, judged against a list of factors derived from Kingman Brewster's treatise on antitrust abroad. The American Law Institute's Restatement (Third) of the Foreign Relations Law of the United States (1987) — an authoritative private codification of U.S. foreign relations law — generalized this scheme: section 402 states the bases of prescriptive jurisdiction (territoriality, nationality, and effects), each 'subject to section 403', and section 403 provides that even where a basis of jurisdiction exists, the exercise of jurisdiction is subject to the condition that it not be unreasonable, determined by weighing the relevant factors. Section 403(2) enumerates the factors to be evaluated, including the link of the activity to the regulating state's territory, the connections (such as nationality, residence, or economic activity) between the regulating state and the persons principally responsible for the activity, the character and importance of the regulation, the extent to which other states regulate the activity, the existence of justified expectations, the importance of the regulation to the international legal, political, or economic system, the extent to which another state may have an interest in regulating the activity, and the likelihood of conflict with regulation by another state. Section 403(3) addresses the situation in which two states have each reasonably exercised jurisdiction and their prescriptions clash so that a person cannot comply with both. The Restatement's reporters deliberately used 'reasonableness' rather than 'comity' — the traditional name for the respect one sovereign's legal system gives to another's acts — because comity connotes discretion or political judgment rather than legal obligation.

The immediate source of the problem is the 5-4 decision in Hartford Fire Insurance Co. v. California, 509 U.S. 764 (1993), rejecting the comity defense of London reinsurers whose challenged conduct took place in England and was consistent with a comprehensive UK regulatory and self-regulatory regime. Justice Souter's majority held that the Sherman Act (the principal U.S. antitrust statute) applies to conduct abroad meant to produce and in fact producing substantial adverse effects on U.S. commerce, and that the only substantial comity question is whether 'there is in fact a true conflict between domestic and foreign law'; no conflict exists 'where a person subject to regulation by two states can comply with the laws of both'. Justice Scalia's dissent, applying Restatement (Third) section 403, would have declined jurisdiction, concluding that the balancing factors rarely pointed more clearly against applying U.S. law. Andreas F. Lowenfeld — one of the Restatement's reporters and a member of the legal team for the foreign defendants — argued that the majority had misquoted section 403 comment e (which says that subsection (3) 'does not apply' when dual compliance is possible, not that no conflict exists), thereby equating 'conflict' with foreign compulsion and collapsing the distinction between the foreign-compulsion defense (settled since the Nylon and Light Bulb cartel cases of the early 1950s: no one should be ordered to do what the law of the place of conduct forbids) and the separate inquiry into conflicts of state interests. In his Hague Academy course (published in the Recueil des Cours, the Hague Academy of International Law's collected-courses series), and in the 1995 American Journal of International Law editorial comment announcing it, Lowenfeld pressed a series of harder cases: what if the foreign government had expressly approved the agreements; what if they took effect on non-disapproval after submission to a minister; what if approval rested with an industry committee acting under governmental delegation? Each is an exercise of foreign prescriptive jurisdiction and an expression of foreign values that stops short of compulsion, and Lowenfeld concluded that 'there is a significant space' between foreign indifference and foreign compulsion in which the existence of conflict, and the reasonableness of applying forum law, must be evaluated.

Subsequent developments changed this terrain without answering Lowenfeld's questions. F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155 (2004), and Motorola Mobility LLC v. AU Optronics Corp., 775 F.3d 816 (7th Cir. 2014), limited the extraterritorial reach of U.S. antitrust law through statutory interpretation and the domestic-effects requirement rather than reasonableness balancing. Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010), and RJR Nabisco, Inc. v. European Community, 579 U.S. 325 (2016), displaced the effects-versus-balancing debate for most other regulatory statutes through the presumption against extraterritoriality — the interpretive presumption that federal statutes apply only to conduct within U.S. territory unless Congress clearly indicates otherwise — applied in two steps: first, whether the statute reaches conduct abroad at all, and second, if it does, whether the case involves a domestic application of it, judged by the statute's 'focus'. Finally, the Restatement (Fourth) of the Foreign Relations Law of the United States (2018) dropped the Restatement (Third)'s case-by-case reasonableness requirement; its section 405, entitled 'Reasonableness in Interpretation', says only that courts in the United States may interpret federal statutes to include other limitations on their applicability. Whether the reasonableness limit survives as customary international law, and how it operates in adjudication, is itself contested: Dodge, the Reporter of the Restatement (Fourth), maintains that reasonableness (through a 'genuine connection' requirement) remains part of customary international law and of existing case law, while Ryngaert criticizes the shift as jurisdictional 'parochialism' that reduces reasonableness to a canon of statutory construction, and Buxbaum and Michaels argue that despite the Restatement (Fourth)'s framing a reasonableness requirement is part of existing case law.

Problem Statement

How should the reasonableness limit on the exercise of jurisdiction to prescribe be specified and applied — in Lowenfeld's formulation, with three linked sub-questions now restated for the doctrinal setting that exists after Hartford Fire, Morrison, RJR Nabisco, Motorola, and the Restatement (Fourth):

  1. Conflict without commands. When the foreign state does not compel the challenged conduct but instead approves it, regulates it through approval or non-disapproval schemes, or builds a comprehensive regulatory or self-regulatory market structure around it, when does a conflict of state interests exist that must be evaluated before forum law is applied? Where, in the significant space between foreign indifference and foreign compulsion, does the threshold lie?

  2. Weighting and field sensitivity. How much weight should each reasonableness factor carry — the territorial link and the magnitude of effects; the connections of nationality, residence, or economic activity; the character and importance of the regulation to each state; the extent to which other states regulate the activity; justified expectations; the extent of another state's interest in regulating the activity; and the likelihood of conflict — and should some factors be treated as dominant in particular fields such as antitrust, maritime activity, or trade regulation?

  3. Unreasonable versus contested. By what criterion does one distinguish a genuinely unreasonable exercise of prescriptive jurisdiction, which a court or regulator should decline, from one that is merely contested but still lawful?

The question is how the reasonableness limit should be specified and applied when two states both have substantial regulatory interests in the same conduct and neither has issued a direct command forcing compliance with one law and breach of the other, and how that specification bears on Hartford Fire's true-conflict rule (which governs antitrust), the Morrison/RJR Nabisco presumption framework (which governs most other statutes), and the Restatement (Fourth)'s treatment of reasonableness as a principle of statutory interpretation.

References

  1. Andreas F. Lowenfeld, 'The Limits of Jurisdiction to Prescribe', in International Litigation and the Quest for Reasonableness (General Course on Private International Law), 245 Recueil des Cours 43 (Martinus Nijhoff, 1994). DOI: 10.1163/ej.9789041100344.009-319.4, https://doi.org/10.1163/ej.9789041100344.009-319.4
  2. Andreas F. Lowenfeld, International Litigation and the Quest for Reasonableness (Oxford University Press, 1996). DOI: 10.1093/oso/9780198260592.001.0001, https://doi.org/10.1093/oso/9780198260592.001.0001
  3. Andreas F. Lowenfeld, 'Conflict, Balancing of Interests, and the Exercise of Jurisdiction to Prescribe: Reflections on the Insurance Antitrust Case', 89 American Journal of International Law 42 (1995). DOI: 10.2307/2203890, https://doi.org/10.2307/2203890
  4. Phillip R. Trimble, 'The Supreme Court and International Law: The Demise of Restatement Section 403', 89 American Journal of International Law 53 (1995). DOI: 10.2307/2203891, https://doi.org/10.2307/2203891
  5. Hartford Fire Insurance Co. v. California, 509 U.S. 764 (1993) (also 113 S. Ct. 2891). Opinion at https://www.law.cornell.edu/supct/html/91-1111.ZO.html
  6. F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155 (2004). Opinion at https://www.law.cornell.edu/supct/html/03-724.ZO.html
  7. Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010). Opinion at https://www.law.cornell.edu/supct/html/08-1191.ZO.html
  8. RJR Nabisco, Inc. v. European Community, 579 U.S. 325 (2016) (also 136 S. Ct. 2090). Opinion at https://www.law.cornell.edu/supremecourt/text/15-138
  9. Motorola Mobility LLC v. AU Optronics Corp., 775 F.3d 816 (7th Cir. 2014). Case page at https://www.courtlistener.com/opinion/2755741/motorola-mobility-llc-v-au-optronics-corporation/
  10. John H. Knox, 'A Presumption Against Extrajurisdictionality', 104 American Journal of International Law 351 (2010). DOI: 10.5305/amerjintelaw.104.3.0351, https://doi.org/10.5305/amerjintelaw.104.3.0351
  11. William S. Dodge, 'The Presumption Against Extraterritoriality in Two Steps', 110 AJIL Unbound 45 (2016). DOI: 10.1017/s2398772300002385, https://doi.org/10.1017/s2398772300002385
  12. Hannah L. Buxbaum, 'The Scope and Limitations of the Presumption against Extraterritoriality', 110 AJIL Unbound 62 (2016). DOI: 10.1017/s2398772300002415, https://doi.org/10.1017/s2398772300002415
  13. Hannah L. Buxbaum and Ralf Michaels, 'Reasonableness as a Limitation on the Extraterritorial Application of U.S. Law', in The Restatement and Beyond: The Past and Future of U.S. Foreign Relations Law 283 (Oxford University Press, 2020). DOI: 10.1093/oso/9780197533154.003.0013, https://doi.org/10.1093/oso/9780197533154.003.0013
  14. William S. Dodge, 'International Comity in the Fourth Restatement', in The Restatement and Beyond: The Past and Future of U.S. Foreign Relations Law 319 (Oxford University Press, 2020). DOI: 10.1093/oso/9780197533154.003.0015, https://doi.org/10.1093/oso/9780197533154.003.0015
  15. William S. Dodge, 'Jurisdiction, State Immunity, and Judgments in the Restatement (Fourth) of US Foreign Relations Law', 19 Chinese Journal of International Law 101 (2020). DOI: 10.1093/chinesejil/jmaa004, https://doi.org/10.1093/chinesejil/jmaa004
  16. William S. Dodge, 'A Modest Approach to the Customary International Law of Jurisdiction', 32 European Journal of International Law 1471 (2021). DOI: 10.1093/ejil/chab093, https://doi.org/10.1093/ejil/chab093
  17. Cedric Ryngaert, 'The Restatement and the Law of Jurisdiction: A Commentary', 32 European Journal of International Law 1455 (2021). DOI: 10.1093/ejil/chab096, https://doi.org/10.1093/ejil/chab096
  18. Natalie L. Dobson and Cedric Ryngaert, 'Provocative Climate Protection: EU "Extraterritorial" Regulation of Maritime Emissions', 66 International and Comparative Law Quarterly 295 (2017). DOI: 10.1017/s0020589317000045, https://doi.org/10.1017/s0020589317000045
  19. Dan Jerker B. Svantesson, 'A New Jurisprudential Framework for Jurisdiction: Beyond the Harvard Draft', 109 AJIL Unbound 69 (2015). DOI: 10.1017/s2398772300001197, https://doi.org/10.1017/s2398772300001197